In this article we’ll go through the considerations for starting a second practice. Timing (Financial Considerations): Profitability and revenue of your existing practice: Your first practice SHOULD be profitable from a BUSINESS PERSPECTIVE AFTER YOU DRAW YOUR 40%. Roughly 1 million in revenue is ideal as you should have a profit percentage of…
**Dental Practice Ownership: Are you buying yourself a job?** Owning a dental practice is an investment and sufficient profits do need to be made in order to have a return on that investment. Yes, there is no doubt, as clinicians, our first duty is to serve our patients and do what’s in their best interest.…
**Service Fees and Income** This article is directed at prospective owners rather than experienced owners. Through our consulting business we often get asked why there is a difference between the income figure on the profit and loss statement vs the income (or total billings/receipts) from the practice management software. Often, prospective owners go as far…
**Profitability Update** The dental industry, like many others, is not immune to the effects of inflation. There is a need to produce more income in order to maintain profits. We’ve posted an update on one of the most important slides from our start-up and buying seminar below. It shows target profitability at different levels of…
**Be aware, the low billing practice** There will be a tsunami of practices coming up for sale or are already on sale, that are billing less than $500,000 a year. These practices have no profit and many are making a significant business loss. Many of them were started up in the last 4-5 years. Some…
**Marketing Return On Investment (ROI)** Marketing ROI, measures the effectiveness of the practice’s marketing efforts in generating revenue. For a dental practice, successful marketing campaigns can attract new patients, retain existing ones, and promote higher-value treatments. Calculating marketing ROI involves comparing the cost of marketing initiatives to the revenue generated from those efforts. Analyzing marketing…
**Case Study: Assessing Financials** Over the years we have seen many versions of dental financial statements through our consulting business. We’d like to think we have encountered most scenarios. However, every now and again we do get sent financials that surprise us. As a dentist looking to purchase a dental practice who has very little…
**Auxiliary Staff Ratios** It is probably the best time to visit this topic in light of increasing wages and difficult economic times ahead. In good times additional staff can go unnoticed, that is the additional billings make up for any staffing inefficiencies and hit on profitability. However, in an environment of stagnating or decreasing billings…
Profit! We expect dental practices that bill above 1 million to produce significant business profitability. We generally anticipate this to be around 20% of turnover. However, recently we’re analysing more and more of these practices that are far off this target with some even making a loss. Profitability typically rises with billings. There are exceptions…
Many good businesses have been undone by cash flow problems. For any potential practice owner, it is important they understand cash flow before embarking on ownership. At its core, cash flow is defined as the amount of money going into and out of your business at a given time. When there is more money…