At my practice ownership (startup and buying seminar) on the weekend, there was quite a bit of discussion about the economy and what we might expect coming up and what owners should be doing. I’d previously written about some things in 2020 when the downturn I predicted in our industry never actually materialised and things went berserk the other way. However, I think the next 12-18 months all those strategies I spoke about previously will be important.Despite the previous commentary, I think there are three main things every practice owner should be doing:1. Start getting profit and loss reports from your bookkeeper and accountant at shorter intervals. Monthly. Not quarterly or six monthly. Also track revenue weekly. With expenses rising significantly and revenue falling, it’s very important you’re getting real time and up to date info on how your business is going and if things aren’t looking good then you need to act one way or another quickly. Not leave it six months before you even identify the problem. Shifting to a monthly reporting system may necessitate some significant changes in how you do your bookkeeping in terms of entering invoices etc. Make the change. Data is power and in tough times, you need to be in control.2. Stop ordering in bulk and after June 30, look to delay non-essential equipment where you can. Bulk orders have two problems – they eat up cashflow fast and if you get quiet, stuff will expire because it won’t get used. Also watch other expenses like a hawk. Don’t waste money on stupid marketing ventures or DYI marketing that doesn’t work. Get proper marketing advice and redirect it to initiatives that have a better ROI.3. April 2023 is gonna be an absolutely shit time for MANY business owners across all industries including dental. To understand why, we have to look back a little. At the end of the financial year in June 2021, many business owners had earned quite a bit of money but because of government tax incentives, particularly the instant asset write offs, they got significant depreciation benefits that brought down their total tax bill. Many business owners paid less than 20% tax despite comfortably earning incomes that put them in the top tax brackets.Not only did that mean more money and more spending but it also meant the quarterly PAYG installments throughout the 2022 financial year have been low. In the financial year ending June 2022, practice profits have continued to be very high throughout the financial year.However, the big issue is, most depreciation benefits have been used up completely and so the tax bill come April 2023 (for FY 2022), is going to be massive.To further exacerbate the problem, once you lodge your tax return, the ATO will find out that you have been paying far less in quarterly PAYG payments than you should have been so there will likely also be a significant catch-up payment for a portion of the 2023 financial year. What really compounds the problem is that come April 2023, if business has been quiet, cashflow may be a huge problem and many people may not be able to fund their end of year tax bills and catch-up PAYG payments. It’s important you speak with your accountant and properly plan for this.What are others thoughts? Please leave your comments below and like if you have enjoyed the post or gotten something out of it.
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