One of the best things I learned [sadly, too late] during my career as a Dental Office Owner was to pay yourself first!!
Unfortunately I only learned this in the last five years of my career as a full time practice “owner”. I learned this *pearl* only after the sale of my practice to Dental Corporation in November 2007; only when I had to operate the practice under their financial terms: running it as a business first with strict attention to the numbers. For the prior 21 years, as a sole trader, I did not run my business as a business per se.
Luckily for me, my first 21 years as a dental practice owner were very fruitful and profitable, despite the fact that I did not *strictly* study the numbers…
I must say, from the outset, that I was fortunate in my early career to have good accounting advice. I was very fortunate to be advised to put maximum money away in Personal Superannuation. However, apart from this, I’m ashamed to say that my financial belief for the Dental Practice was simply, to quote or misquote, that “if there’s enough gross around, there’s got to be some net left over somewhere”.
Sadly, this seems to be the way that a lot of dental offices run their businesses….but without the good fortune that I had…
They collect a gross, pay their dues, i.e. rent, consumables, staff expenses and insurances etc., and then, with what’s left, they either lash out and buy new equipment, or they pocket what’s over.
So many doctors get to the end of a financial year, and often it’s much later, and then get their figures from their accountant, and work out, then and there, whether it’s been a good or bad year.
Sometimes, dentists get to the end of their working lives, using the same misguided thoughts and ideas…
I believe, that part of this so called “numeracy confusion” can stem from the existence, or establishment of a family trust and service company entity, which is very beneficial, but in my case, served to confuse the issue somewhat in terms of working out who was paying whom for what, if you get my gist?
However, in the instance of engaging additional practitioners, be they hygienists or additional dentists, the existence of this entity, can be beneficial in running the office as a serviced facility, with the appropriate contracts of course. Separating the facility from the practitioners, including the owner, certainly allowed the owner to separate business costs from his own rewards and exertions.
Separating your personal rewards from the business costs and expenses, should be your first step in heading towards your true financial rewards for your studies, your financial investment, and your risks, and also for your toiling in running the business.
Without this separation, you’ll find yourself spending your *whole* life running on the treadmill wheel, much like a gerbil…a lot of action but going nowhere!!
In future weeks, my Friday blogs will expand upon my thoughts on how to best “break down” your dental practice takings into their appropriate sections… and my thoughts on what best to do with those sections of your takings.