Wouldn’t it be great if there was a surefire way of achieving the results you’ve dreamed of? There is, says dental buisness coach Andy McDougall from Spot On Business Planning – it’s called effective business planning.
Everything you do in your dental practice comes back to numbers so understanding them is essential – but knowing how to influence them is critical. When working with Spot On Business Planning we cut through the jargon to teach our clients what they should have learned at dental school.
The process starts by taking a look at where your business is today and comparing that with where you would like it be at some time in the future. Being able to read a set of accounts and understand what it tells you about the changes you should be making if you are to improve profits is vital. Welcome to the world of business planning.
This article gives you a taster of the kind of things clients of SOBP typically experience and learn.
Focus on the important numbers but manage the rest
When analysing your accounts remember the 80/20 rule. Your profit and loss account may contain 20 or 30 different separate lines of income and expenditure until you reach the net profit figure. It can be an onerous task to review every line to determine how you have performed in that instance. Take heart though that not all the numbers will have such a radical effect on profit. The bigger ones: income, dental materials, labs, wages, associate pay – are often the key drivers and getting these numbers under control is therefore vital if you are to influence profit in significant way. In other words, focus on the 20% of lines that influence 80% of your result. Then apply my ‘quarters and halves’ rule for the rest – by saving just a few percent on the remaining lines collectively it could add up to a sizeable saving.
Tips for managing stock
There will be many areas of practice process that you can tighten up to improve profitability, cash flow and overall efficiency. One that is often overlooked is the importance of stock control. Ensuring you don’t have unnecessary money tied up in high levels of stock is a priority. Determining how much you actually need based on usage, ensuring stocks are rotated correctly to avoid stock going past its sell by date, comparing prices to ensure you are buying the items that count as the most competitive prices, identifying areas of overstock so you can take the appropriate action in a timely way: there are so many ways to gain efficiencies in stock control and each and every one will pay dividends in terms of your practice’s overall performance.
Double your profits every three years
There is no magic pill. No gimmicks. No hyperbole. Typically, our dental clients double their net profits every three years. Learn a lot about your own dental business with a free consultation with dental business consultant Andy McDougall. Send us your last 3 years of financial accounts, Andy will analyse them and explain the strengths and weaknesses he reads in your numbers.
Our next blog will take a look at costs and why not all costs are equal, why all income is not the same, profit and cash, and how to have complete control of your dental business.