December 11, 2018

A different way of looking at the numbers: part 2

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Learn how to double your profits with a little help from dental business coach Andy McDougall from Spot On Business Planning[/caption]Dental business coach, Andy McDougall from Spot On Business Planning, reveals part two of our blog about using effective business planning to achieve the results you have always dreamed of.

Not all costs are equal

Costs fall into two categories: variable costs that change with your levels of dental activity or income, and fixed costs that don’t change regardless of what is going on with regard to treatments. For instance, your rent or mortgage on the dental practice building would be an example of a fixed cost. Even if you don’t see any patients, it still needs to be paid each month, while dental materials is a good example of a variable cost because it changes with the level and type of treatments you undertake in the month.Remembering the relationships between these numbers is crucial when producing budgets from your business plan and in understanding your results each month when you review your management accounts.

All income is not the same

Income too can be broken down into fixed and variable types. For instance if you have a dental plan, a regular amount of income will arrive into your bank account each month regardless of whether you see that patient or not. In this instance there is no relationship between the arrival of that income and clinicians working. However, your private non-plan income will vary each month and is only generated when your clinicians are in the practice.

Profit and cash

Profit and cash are not the same things. I often get asked how come I have a decent profit but no cash? Your profit has certain items deducted in deriving it e.g. depreciation, which does not go through the bank, and hence it is not a cash flow item. If you have loans in the business these will need to be repaid, and only the interest will have been charged against profit, so cash flow will be affected by the capital element of these loan repayments. There is also the effect of tax and your drawings.

Being in complete control of your dental business

When you have your business plan, one of the outputs is your monthly budget against which you will measure your actual performance in the form of a set of management accounts. Being able to read and understand them is vital. If you know early enough in the year that your business is under performing and you can ascertain why, you quickly take the necessary action to get it back on track.But management accounts are only the start. Management accounting drills down to look at the numbers from several different perspectives:

  • profitability by clinician
  • profitability by treatment type
  • profitability by income stream e.g. NHS/Dental Plan/Private Fees

By slicing the numbers in the ways mentioned you would ascertain the areas of your business where improvements can be found.

I like it and I want more

Spot On Business Planning provides business planning services that assist members of the dental community to respond to the dynamics of an increasingly commercial and competitive environment. Our tailored service provides straight-talking and results-driven advice and tools that transform performance – and our clients typically double their net profit every three years.If you are interested in improving your financial results and running your practice more efficiently contact us to request a FREE initial consultation.

Our upcoming events

Nov 21, 2025

BDA Setting up a dental practice

The BDA Setting up a dental practice in-person workshop is a great opportunity for you to gain invaluable support, advice and insider information from expert speakers, including Andy McDougall and Anne-Marie Houston, on how to set out on your own for the first time.

Jul 10, 2025

Planning your successful exit

Join industry experts & learn how to plan your successful exit at this free live event!

Enjoy an opportunity to join Andy McDougall & Anne-Marie Houston in person at a free event in Surrey in July for dentists keen to maximise their exit value and gain tips for a smoother sale.

Spot On Business Planning is joining Dental Practice Sale and AMG Wealth on Thursday, July 10 for the informative live event to help dentists plan their successful exit.

The three companies will address key areas of concern to practice owners leading up to a sale, the sale process itself and post-sale aspects.

One of our strategic partners, Dental Practice Sale, is a specialist dental broker with an expansive national network of contacts and a team whose pedigree encompasses some of the UK’s most important, prestigious and noteworthy dental business transactions. Collectively the team has decades of experience in valuing, buying and selling dental practices and utilises its vast knowledge to offer the best all-round service.

AMG Wealth is a chartered financial planning practice that delivers high calibre intergenerational financial planning advice. It develops close working relationships with clients to provide investment planning based on your personal priorities, such as keeping a good standard of living in retirement or protecting wealth for future generations.

  • Learn how to maximise your exit value - what are the drivers?
  • Understand the benefits of structuring your business ready for exit
  • Determine the best point to exit
  • Hear a personal account from a DPS client & practice seller
  • Gain insights on the state of the market today
  • Consider where your practice sits with the different buyers in the market
  • Uncover the details in deal structures
  • Be informed about the valuation process & how you can influence it
  • Be aware of options pre sale such as EOT, Pre Sale Trusts, significant share holder exemption
  • Transition into the next phase of life (if retirement, what you will do, having winter hobbies etc)
  • Ensure you run out of life before running out of money (cash forecasting)
  • Protect the estate for now and future generations
  • Complimentary drinks and buffet from 6.30pm

The event at Brooklands Hotel in Weybridge starts at 6.30pm with drinks and includes a buffet.

Click here to reserve your space: https://www.dentalpracticesale.co.uk/events/evant-2?hsLang=en-gb

BDA Business Essentials Course

This two-day workshop is ideal for any dental business owner and their practice manager looking to transform poor performance, prepare for sale, or take their practice to the next level with a vision for expansion. Presented by industry experts Andy McDougall and Anne-Marie Houston, this interactive workshop will equip you with the essential tools and strategies to succeed in today’s competitive market.

Book your 121 Zoom with Andy McDougall

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