Introduction: Having a successful career in dentistry does not depend only on your dental skills. Success in dentistry is an amalgamation of many factors. One of the most important factors that have a massive impact on the success or failure of any dental practice is
” How the dentist manages the money? “
You might be the best dentist in your town. But, if you don’t know how to manage your money in the correct way, you will never be able to sustain a stable, financially profitable practice that grows year after year.
For this article, we took inputs from many dentists who have been practicing for at least a decade.
From their inputs, we have prepared a list of
10 ways for dentists to manage their money.
(The ultimate financial Dental Practice Management)
Points covered in this article:
Ways For Dentists to Manage Their Money and
Increase their Earnings
- Keep a track of all the incoming & outgoing finances of your dental practice.
- Be very wise and calculative in personal spending.
- Understand your personal spendings and make peace with your spending power.
- Keep a careful watch on debts, salaries, and investments related to your practice.
- Secure the safety of your practice and family by insurances.
- Make an investment plan & invest wisely in raising your revenues.
- Control the overhead cost of your dental practice.
- Plan for your retirement.
- Start using Dental Practice Management Software.
- Take help from professionals/Hire experts to assess your finance.
Conclusion: The takeaway points.
At the end of the article, we have designed a very nice infographic to show you the 10 tips for saving money. You will need to reach the slide of the article to see the amazing infographic designed by a dentist/designer.
1. Keep a track of the Incoming &
Outgoing Financial Metrics of your Dental Practice
Running a dental practice has many types of financial aspects that run simultaneously. It’s very easy to get confused managing so many financial factors. But the success of a dentist depends on this. So, how does a dentist keep a track of so many financial matters? It is possible by simplifying the tasks.
Finances of a dental practice can be tracked in the following ways:
- One time expenditures: One time expenses while starting or upgrading your dental practice, for example, buying a dental chair or a new laser unit or forceps.
- Fixed monthly/yearly expenses: Monthly recurring fixed expenses, for example, clinic space rent, loan interests, equipment EMI payments, insurances etc.
- Variable monthly expenses: Monthly recurring but variable expenses, for example, dental material cost, lab bills, electricity bills, internet bills, etc.
- Patient acquiring cost: Expenses on the promotion of your dental practice. In the modern day practice management, it is an essential part of success. We have discussed this in one our previous articles before. See here: Types of promotion & patient acquiring.
- Patient acceptance rate: You might have the best dental clinic or equipment. But if you are not able to convince the patient for dental treatment, then what is the use? So, keep a close watch on the patient inflow and acceptance rate. For a dental practice to be financially successful the patient acceptance rate has to be more than 60%.
- The number of new patients: One of the most critical parameter to judge the growth of your dental practice. Maintaining contacts with old patients is necessary but your dental practice can show growth only when there is a regular flow of new patients.
- Prices of the Dental Treatments: Keep a watch on the prices that you quote on your dental treatments. never undervalue yourself but at the same time decide on the pricing considering the demography that you reside in.
- Pending payments: Many dentists tend to neglect this in their efforts to retain patients or gain new patients. In your monthly assessment if you find multiple payments from patients that are still pending, then it’s time to send them a reminder to clear the pending dues. Do not be afraid that by doing so you are going to irritate the patient. If you don’t take action then your practice money is on the line.
- Equipment maintenance cost: A dental practice has a lot of equipment that needs regular maintenance. A dentist needs to keep a watch on the warranty and regular maintenance. All of this leads to proper management of money.
Keeping a track of the incoming finance & outgoing expenditure is one of the most successful tricks for dental practice management.
Check the Next Slide for
Point #2 & #3 of Money Management for a Dentist
Be Wise & Calculative in Personal Spending &
Make peace with your earning capacity
We are discussing 10 ways for a dentist to manage their money and maintain effective dental practice management.
2. Be Wise & Calculative in Your Personal Spendings
Yes, it is true that after years of studying to qualify as a professional dentist, you are finally a professionally earning dentist. When you get that first monthly income from your practice you will feel like enjoying your first financial independence. Once or twice it might be ok.
But then you will need to get wise & calculative as mentioned in the title of this point.
You have to realize fast that your personal spending as a dentist depends on the stage of the dental career you are in.
5 Stages in the Professional Life cycle of a Dentist
Learn about 5 stages in the professional life cycle of a dentist. We are taught dentistry but no one teaches us the business cycle of Dental Practice. This lack of knowledge regarding the business aspect is hurting the dentists in the long run.
As a general rule you can follow these points:
- It’s better not to go overboard in your personal spendings.
- For example, if you already have a house then it makes no sense in taking a huge loan for another house. As the monthly installment will be an additional financial burden on you.
- Before you start spending on personal enjoyments, first make sure to clear your installment dues and insurance premiums.
- It is one of the most important daily habits for a dentist to be successful as stated by some of the most successful dentists and businessmen.
Read here to know about the 9 best Business & Financial tips for dentists: 10 Best Business & Financial Tips for Dentists.
3. Make Peace with your Money Spending Capacity
You must have come across many stories where a famous player or an actor (who was apparently rich some time back) filing for bankruptcy. Mind it, they earn millions in their line of the profession but still, they somehow managed to go bankrupt.
You might ask HOW?
But you already know the answer.
They went bankrupt because they kept no check on their spendings.
The size of their bank balance made then arrogant towards money and they ended up spending all they had before it was time to realize.
“To successfully manage the money, you first need to respect money.”
You as a dentist can learn a lot from this. You might be a beginner or an experienced practitioner. Depending on the stage of your dental career you will have the related financial power. There will always be certain things that you do want to purchase, which are beyond your current financial power.
Say for example you have that deep desire to own an AUDI car, but your current financial status is not exactly suitable to make the purchase. But still, you go for the purchase stretching your financial power to the maximum. The euphoria of the new Audi car will last for a few days, but then the reality of the monthly installment comes up. It’s an additional burden on your already stretched finance.
To cover up this additional monthly installment you will now need to save money from some other essential personal expenditures.
The point to understand here is – ” Make peace with your money spending capacity. Do not get into the habit of making purchases which do not fall in your comfort zone. Such expenditures will only increase your financial burdens.
See Next Slide for
Point #4 of Money Management for a Dentist
Watch Out for your Debts & Investments
We are discussing 10 ways for a dentist to manage their money and maintain an effective dental practice management.
4. Watch out for Debts, Salaries &
Investments related to your dental Practice
Running a dental practice has many overhead costs. Some of the costs are:
- Paying for the debts that you have taken while establishing your dental practice.
- Paying for the loan interests that you might have taken during your dental education.
- Paying for the installments of your dental equipment like RVG or laser unit.
- Paying regular salaries to the people working in your dental practice.
- Keeping a track of the investments or partnership finance of your dental practice, if it is based partnerships.
- Paying a close watch on the fees that you charge for the dental treatments.
So, when managing the monthly finance of your dental clinic, never lose track of these financial investments. If you keep overlooking these points and one day you when you finally assess, you will find yourself struggling with a lot of financial overdue.
Also, make it a habit of clearing the debts, monthly loan interests, monthly payments to your dental material supply guy etc. before spending on any personal enjoyment. One of the topmost and richest businessmen in the world, Warren Buffett has said it perfectly.
If you get into the habit of spending your hard earned money in an unplanned manner on unnecessary things then you will soon run out of money to buy the things that are necessary, even for your dental practice.
Read here to know the Top Business and Financial Tips for Dentists.
How much to charge for your dental treatments?
As mentioned in the previous point, be very wise in deciding the prices of the dental procedures.
Keep a note of the following points while deciding on the prices.
- It must be a scientific and socially based decision.
- The prices must relate with the locality where you are practicing.
(for example, if you are practicing in a metro then the prices will be higher than a dentist who is working in rural areas)
- Never make a sudden increase in the price. It should always be a gradual process.
- Never give the impression to your patients that you are only after money. Yes, the dental practice needs money but you will fare much better if you work with dedication. Money will then become just a byproduct of your dedication. If you just worry about making money, you will get more stressed and the quality of your work will also reduce. Patients can feel when a doctor is dedicated and then they are more responsive to the price increase.
- Never get into the practice of lowering your prices below the market price in the hopes that it will get you more patients.
Dr. Varun Bajaj has written a very informative article on these price war among dentists: 3 Practices to uplift dentistry & The Price Wars
How to keep a track on the salaries?
If your dental practice has multiple people (technicians & other dentists) working in it, then you need to manage the money that you pay as salaries. Keep a watch on these points while paying the salaries in your dental practice.
- Do not be overtly miser in paying salaries. If you are too stringy then you cannot expect your dental practice team to give their 100 %.
- Also, pay the salary depending on the living cost of the area where your practice is located.
- Keep a record of all the salaries that have been paid. Also, before hiring anyone, get a complete legal document of salaries that has been agreed upon.
See Next Slide for
Point #5 & #6 of Money Management for a Dentist
Secure the safety of your practice and family by insurances.
Make wise investments
We are discussing 10 ways for a dentist to manage their money and maintain an effective dental practice management.
5. Secure the safety of your dental practice and family by Insurances
One of the most important aspects of managing money for a dentist is the use of Insurances.
Insurances provide financial protection to your dental practice and also to your family.
One more benefit is that if you are paying insurance premiums, then you will get income tax exemptions, which will save you a lot of money.
What are the insurances that a dentist can use?
- Insurances for the protection for Dental Practice and Equipment.
- Insurances for the protection of your family.
Irrespective of the country where you practice dentistry, you must make use of the insurances that are available. Types of the insurances that a dentist can use are:
- Insurances for the protection against the damages to your clinic.
- Insurances for the protection against consumer cases (Indemnity Insurance)
- Life insurances (with or without maturity benefits)
- Health Insurances.
Insurance for dentists is a big topic to cover. We have previously published a detailed article on it explaining the various types of insurances that a dentist can and must have. You can read the article here:
6. Make Wise Investments that increase
your Personal & Dental Practice revenue
One of the cardinal rules of making more money is to invest more money.
As contrary to point number 4 these are not unnecessary spendings.
Here, you will have to choose wisely the areas where you should spend.
These wise and calculated investments have the potential to increase the revenues of your dental practice.
But when it comes to running a dental practice, what are the things you need to spend/invest money on in order to maximize revenues?
We asked these question to many dentists in the course of writing this article and from their answers made a list of the points.
Invest money in:
1)Making your patients happy: Investing money in making your patients always works in favor of your practice. A happy patient will refer your practice to everyone he/she knows thereby bringing in more new patients. More revenue! So, invest money in your practice to make it comfortable, pain-free and soothing for the patients.
2)Promotion of your dental practice: Invest in making your practice known to the people in your and nearby location. Promotion of your dental practice can be done two ways – online promotion and on location promotion.
Online promotion: Invest in a good website for your practice, social media promotion, google ad words promotion.
Read these article to know how to use a website, social media(facebook) & Google & SEO for the online promotion of your dental practice.
Offline Promotion: Though it is good to have online promotions but it should be used as an adjunct to the in-person promotion in your local community. Always remember until unless you are active in your local community, your dental practice will never get the name that it should. So, invest money in that regard. What are the points where a dentist can invest money in on location promotional activities:
-
- Attend local social functions and be a sponsor of the local events.
- Make contributions and deliver speeches on dental career/care in school, colleges and community gatherings on health care & awareness.
- Attend treatment camps being conducted by other doctors & organizations.
- Visit rural places to provide dental treatment.(for free)
- The goal is to make yourself visible in your local community.
- Slowly & steadily you will rise the ladder up.
- Buy print ads to promote your practice in local newspapers or try to write health articles in the local magazines.
- You can also use Radio for speech & promotion. Spend money in purchasing an evening slot on Radio to promote your dental practice. That’s one of the easiest ways to get close to your local community.
Read this article to know about the 2 best ways to promote your dental practice on the internet and to your local community.
2 Best Ways to Market Your Dental Practice – Dental Practice Management
In this article, we will discuss on 2 most effective ways for the promotion of your dental practice. Use these 2 ways to make your dental practice more popular. The trick to successful dental practice management The Mantra of Promotion in Dental Practice Management In simple words – it’s the world of promotion and marketing.
See Next Slide for
Point #7 & #8 of Money Management for a Dentist
Control the overhead cost of your dental clinic
Plan for your retirement
We are discussing 10 ways for a dentist to manage their money and maintain an effective dental practice management.
7. Control The Overhead Costs of Your Dental Clinic
Running a dental practice includes managing many overhead expenditures.
What are the overhead costs in a dental practice?
- The prices of your dental supplies.
- The prices and maintenance of your dental equipment.
- The electricity prices & internet prices.
- The cost of furnishing your dental practice and renovating it periodically.
- The salaries to your staffs and increment depending on requirements/festivals.
- Rent/Mortgage of the land if you are running your practice at a rented place.
All these costs sometimes merge with the regular monthly expenditure to run a dental practice and this is the mistake most of the dentists commit.
For a dentist who is just starting with his practice (already having raised a loan for the initial investment), all the above-mentioned costs add up to the financial burden.
So, most of the new dentists are opting to have a Lean Practice in the initial years and then scale it up slowly depending on the revenue being generated.
Many dentists who have been practicing for some years now, tend to get too busy and forget to keep a track/control of these overhead costs and suddenly one day finds themselves under the weight of a financial backlog.
The takeaway points: Keep a track of the overhead costs. Do not neglect them. Try to minimize the overhead costs & clear the dues regularly. This habit will help you in saving a lot of money and stress later on.
8. Plan for your retirement
Irrespective of whether you are a beginner or an experienced dentist, you need to have a vision towards your retirement. It’s true that you are not going to retire from your dental career tomorrow. But, having a feasible retirement plan will motivate you to work sensibly to realize your goals.
The career of a dentist goes through 5 stages.
Each stage comes with its own opportunities and problems.
So, you need to plan your dental career and retirement as per the following stages:
An average life of your practice is 25-30 years.
It undergoes five different stages which are
Introduction: Your entry to professional dentistry (Practice age: 0 to 3 years)
Growth: Your practice shows growth (Practice age: 2 to 12 years)
Maturity: You start enjoying the premium and success of your practice (Practice age: 10 to 20 years)
Saturation: Saturation in your practice with increasing expenses. (Practice age: 20 to 25 years)
Decline: It is the decline in your physical & mental status. You take up the role of a mentor handing over your clinic to your kids and a good young dentist. The practice moves on to the next generation and a reminder of your hard work and legacy.
You can read the complete article on the 5 stages in the professional career of a dentist below:
5 Stages in the Professional Life cycle of a Dentist
Learn about 5 stages in the professional life cycle of a dentist. We are taught dentistry but no one teaches us the business cycle of Dental Practice. This lack of knowledge regarding the business aspect is hurting the dentists in the long run.
Now, as you know about all the stages of a dental career, you can very easily understand the importance of having a proper retirement plan. You cannot forever work hard for long hours at your dental practice.
There will come a time when you will get older and reach a saturation level – physically, mentally and emotionally.
By the time you reach this saturation phase, you would have completed your responsibilities as a family man. Your kids will be grown up with their own family and career to take care.
So, how well you adjust with your this retirement phase is related to the financial plannings you make now.
- Save money every month (depending on how much you money you take home from your dental practice) a little as a retirement saving.
- As you start making more revenues from your dental practice, do not let the money stay idle. Invest your money in safe investment options. Mark the word “Safe”. Do not ever invest in unknown schemes or with unknown people.
- In this phase, you can perform your role better as a mentor. You still own your dental clinic. As you are now free from other obligations you can act as the mentor and guide your kids (if they are dentists) or other young dentists to keep your dental practice successfully running.
- Do not forget to enjoy many things that you might have missed out before. All these years you were so caught up in the rat race of the dental practice to fulfill your responsibilities. But now you can make time for many other things like the guitar you loved playing so much.
See Next Slide for
Final Points #9 & #10 of Money Management for a Dentist
Start using a dental practice management software &
Hire professionals for managing the money
We are discussing 10 ways for a dentist to manage their money and maintain an effective dental practice management.
9. Start Using a Dental Practice Management Software
There was a time when people were skeptical of computers or smartphones.
But today can you think of any professional company not using smartphones, advanced computers or software?
In the same way, you also must adapt your dental practice with the latest hardware & software.
So it is high time that you start using a dental practice management software.
If you search online, you will come across hundreds of dental practice management software.
What is the use of these apps & software? To put it in the most simple way – these are the tools that help you in automating many aspects (financial, patient information etc) of running a dental practice. They not only save time but also reduce a lot of practice management related stress. At the same time, they help you to become more efficient. In the long run, you not only save money & time but also you will see an increase in your practice revenues.
What are the TOP useful points/features of a dental practice management software? TO know you can read the article below.
Top 25 Features Of Dental Practice Management Software
25 must have features of dental practice management software. Use these points as a checklist before deciding to purchase any dental practice management software. Maintaining a successful dental practice take a lot of hard work. A dental practice does not include just handling and treating the patients.
Many traditional dentists, mostly in Asian countries, still believe in paperwork to record all the financial details of their dental practice. But you can start using dental practice management software to make your daily dental life much easier. So, what should you do for this?
- Update the computers in your dental practice. You can use either Windows or Mac. Windows based operating systems are comparatively cheaper than Apple Mac devices.
- Get a good internet connection. Most of the dental applications require a good and steady internet connection to run smoothly.
- Scout the market and search for the dental practice management software and choose the one that you feel is best for you. Make sure the software you choose has a reliable customer support. Check out reviews. It is very confusing when you have to choose a dental practice management software out of so many. To help you make the choice you can read the article below.
How To Choose Dental Practice Management Software For Your Dental Practice
10. Hire the help of a professional financial expert
Suppose your friend has a tooth pain!
Whom will he/she consult? Of course, is this even a question!
They will consult a dentist. That’s you!
Why? Because dentist(you) is the expert in managing and giving the expert opinion on dental/oral health.
Similarly, when it comes to the matters of finance dentists need to realize that they are not experts in financial management. Yes, they might have a peripheral knowledge but to properly manage the finance it is best to take the help of a professional financial analyst.
Benefits of hiring a professional financial analyst
- It reduces the stress on you. There are so many types of financial transactions involved in a dental practice that a dentist can sometimes get overwhelmed and confused. So, it gets much easier when a financial analyst who is used to financial assessment, does the assessment.
- Hiring a financial analyst works as a double check. You already have the basic idea on the financial aspects of your dental practice. In the presence of a professional, you are able to better understand the money matters related to your practice.
- An experienced financial analyst can guide you if you are losing money in your practice. They can guide you towards proper investment.
- The biggest benefit of hiring a professional financial adviser is in terms of tax saving.
Points of caution:
- Remember, you are taking the help of the professional to better understand the finances of your dental clinic. Take help and learn from it. But do not be completely dependent on all the advices of the professional. Assess the pros & cons of any advice.
- Keep a strictly professional relationship. If you get over friendly with your financial adviser, then soon you will be coaxed into buying investments or insurances (that you do not require) as a friendly gesture.
Conclusion: The final take away points for dentists on managing money
In this article, we discussed in detail many points that will help dentists to manage their money in a better way.
Let’s conclude & summarize the article in a few key points.
You can note down these points and check if you are actually taking care of these financial aspects.
- For a full-time professional dentist, a steady and increasing revenue from his/her dental practice is essential.
- Make sure that you have taken suitable insurances that are available at your location to safeguard your dental practice against theft, damages and consumer cases. If you haven’t till now then get in touch with a lawyer/insurance agent asap. It is also essential for the safety and future of your family.
- Use a dental practice management software to make it easy for you to document all the financial and patient related stats. It is paramount to keep a track of the financial points and also the essential patient/treatment records to protect your dental practice from any financial or false consumer litigations.
- Hire a professional financial expert to help you invest your money correctly and safely. This will help you to create more money from your current bank balance. It also helps you saving money by reducing the taxes.
- Get all the necessary legal approvals required to run a professional dental practice at your location. This will help you in saving money. Try to bypass the rules and you might end up paying a lot of extra fines.
- Control your personal expenditures. Make a priority list of all the expenditures for every month.(for example loan interest, home loan, education loan, insurances premium, dental equipment installments, payment to your dental supplies etc.) Always clear all these essential dues first. If you don’t, then these amounts will pile up together and in a few months, you will be facing a huge financial backlog.
- Keep a check on your personal vanity spendings. As mentioned in the previous point you are putting yourself in a financial mess when you keep spending and purchasing vanity things keeping aside the essential payments.
- Plan & save funds for your retirement: Dental practice is a physically demanding profession. There will be a time when you will be physically and mentally exhausted. You know then, it’s the time to retire. So, through all the phases of your career as a dentist, you must have a sensible & feasible retirement plan.
Managing a financially profitable dental practice is not easy but not as hard as you might think. All it requires is some self-control and financial common sense. You need to be organized and have a vision for the future. There are hundreds of dentists who work hard but what separates the more successful ones from others in the sense to manage the money.
We sincerely hope that the points discussed in this article will help you in managing the money better than before. All the points discussed here have been suggested by experienced dentists and financial experts who have years of experience in this matter.
Let’s End this long article with 5 Top Quotes on Money
(Collected from internet sources)
- Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like. –Will Rogers
- Try to save something while your salary is small; it’s impossible to save after you begin to earn more. –Jack Benny
- Every time you borrow money, you’re robbing your future self. –Nathan W. Morris
- Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
- Money is a terrible master but an excellent servant. –P.T. Barnum
