The goal of just about every dentist we work with is to grow their dental practice revenues and profits. Unfortunately, there isn’t a quick fix pill to grow our businesses, and while vision boards may be motivating and encouraging – they’re not the secret. Dental office profit planning requires a solid understanding of your numbers and how they impact each other.
Take the time to review your dental practice KPIs (key performance indicators) over a five-year trajectory. These KPIs can include current production, overhead, and profits along with a factor for attrition (most dentists lose 15-20% of their patients annually due to naturally occurring attrition – that excludes poor service and excessive competitors) as well as new-patient flow. Are your current results leading to growth, to a plateau, or (yikes!) to a decline?
Can you really afford to bring in that associate you want so that you can have a little more me time, or is it a disaster waiting to happen because neither one of you will make the money you want?
Three reasons that a five-year forecast review is critical for your dental practice growth:
- You want to increase your income and maintain and/or improve your current lifestyle for several more years and into retirement
- You want to be ready to sell your practice for big bucks
- You’re worried about practice security.
Listen, you’ve slugged it out in your market for all these years. Shouldn’t you be sure you’re going to continue to be rewarded with practice security and profits?
This is where running a simple profit trajectory can give you clarity about what business decisions you need to make.
They will probably involve the following:
- Identifying the team that will take your practice to the next level and providing them with training and opportunity (and making the tough decisions about those that aren’t the “right fit”)
- Reviewing your services and technology to ensure you’re keeping up with consumer demand
- Increasing your marketing expenditure – slightly
- Keeping an eye on your KPIs - tracking marketing and practice performance.
We have reviewed two practice scenarios in the past and it’s worth taking another look. Once you’ve read the following section ask yourself these two questions:
- Am I more like Practice A or like Practice B?
- Who do I want to be more like?
Practice A makes $900,000 annually with a profit margin of $225,000. This practice is spending 2% on marketing and is generating an easy flow of 25 new patients per month. Practice A is happy with the status quo and doesn’t see the need to invest any extra money into marketing.
Practice B also makes $900,000 annually with a profit margin of $225,000. Practice B isn’t satisfied with status quo and decides to increase their marketing expenditure and team training. Their profit margin takes a slight hit in the year they decide to make this change, beyond that they begin a steady climb.
While Practice A’s profits remain relatively steady they definitely decline over a 5-year period. Practice B’s profits significantly increase within one year and more than double within five … with not much more effort than a focus on marketing and practice performance.
This is a scenario that doesn’t take into consideration competitive landscapes and changing demographics – all things that could impact Practice A even more quickly.
Without investing in marketing and team training, your dental practice may be one of the thousands that is currently hitting a plateau, or is in fact, starting to decline. At Patient News we’ve developed an excellent profit calculator that our clients use to help them get a clear visual on the impact of their marketing investments and what decisions they need to make to secure their practice future. Ask your Account Representative to share our profit calculator with you so you can run your actual stats. You might just have an “aha moment” that will change the trajectory of your dental practice and your life.
Ready for some extra fun out on the lake or on the golf course? Make sure your dental practice will support your lifestyle – for life! Get a dental marketing partner that will drive profits for your dental office. We’ll help your practice stand out and grow.
Send us a quick email subject line profit calculator and we’ll get you set up: firstname.lastname@example.org