Dental Practice Finance Tips: 3 Reasons Why Every Dental Practice Needs a Budget

Conroe, United States - June 27, 2023 / STAC Bizness Solutions /

Dental Practice Finance Tips: 3 Reasons Why Every Dental Practice Needs a Budget

For many dental practice owners, the word budget is about as appealing as the word diet. It seems to imply what you will go without, rather than what you will achieve. We get it. In fact amid widespread rising costs, you may intuitively think that budgeting is primarily a tool for reducing expenditures.

However, to the successful dental practice owner, the word budget has a very different meaning. Its more like a map than a diet. Its an outline of where you want to take the practice, and what you need to achieve to get there. Running a dental practice without a budget is like a ships captain setting off on a voyage without a map. Sounds ridiculous, doesnt it? Who would do that?

Yet this is, figuratively speaking, what many dental practices do.

Successful practices, on the other hand, not only set clear targets and budgets each year, but they also monitor them closely each month, even each week, and adjust them as they go throughout the year.

Here are 3 compelling reasons your dental practice needs a budget, now.

NUMBER 1: If you dont know where your practice is going, how do you know youre not already there?

If youre not satisfied with how your practice is performing, unless you set clear goals for where you want to take it, its probably as good as it is ever going to get. At best, it will just wander along, subject to the whims and quirks of the economy and general market conditions.

The good news is that your practice doesnt need to wander along.

The first step in charting a clear course for growing and developing your dental practice is proactively measuring where its at right now. And the numbers do tell a story. For some, they act as a wake-up call. For others, they just confirm the journeys starting point.

Paradoxically, a large part of the value in a business budget is not in the numbers themselves.Its in the realization and acceptance of where you are and where you want to be. The numbers are just the signposts for the journey. A factual look at the numbers that describe where your practice is right now takes away all the subjectivity, opinions, and reasons (often excuses, disguised as reasons).

This is the naked truth.

It is like standing on the scales, naked, looking at yourself in a full-length mirror. That may or may not be a pretty sight! For your practice, these factual numbers are the production revenue, the variable costs, the margins, the overheads, and, lastly, the profit. After all your work, this is the reward youre left with.

Then comes the first of a series of hard questions

• Are you happy with that profit?
• Is it worth it? Or are you dissatisfied? Then
• What do you want those figures to look like?

Answer those questions, and youve just described where you want to be. Congratulations! You have charted your course, which is the first step to ensuring the financial success of your practice.

NUMBER 2: Whats more important to treat? Symptoms or causes?

As you well know, practice revenue doesnt just magically appear. Costs dont drop just because you want them to. Revenue and costs are a result of other underlying factors. Put another way, they are symptoms of causes.

The business budgeting process quantifies the symptoms, and by asking a series of What leads to this number? questions, it also identifies the underlying causes.

For example, underlying factors contributing to a revenue figure could include:

• the number of active patients,
• the number of Hygiene re-appointments,
• the percentage of pre-appointments,
• the dollar value of the average production per visit, or simply
• where your marketing is targeted.

These are all called drivers. The revenue figure is simply a result of these drivers.

Costs are no different. For example, the advertising paid may be a result of a new marketing strategy. Staff wages may be blowing out as a result of overtime paid but underlying that there may be inefficient staff. Or a lack of clear processes. Or both.

So what came first was not the revenue or the cost, but their underlying drivers. The budgeting process forces you to name and quantify these underlying drivers. Thats one of the most valuable aspects of preparing your practices budget. Not the budget itself, per se, but identifying your business drivers.

Why? Because then you can focus on improving them.

Thats what will produce improved results in your business. Not focusing on last quarters figures. Thats history. Its more fun to create history. And that is, in essence, what you are doing when you are in your own business. You are the captain of your destiny, and you can steer it in any direction you want.

Note the word direction. A key point is to have one. You will enjoy how effectively the budgeting and planning process will get you crystal clear on your direction.

NUMBER 3: Budgeting is not about accounting. Its about being accountable.

Once you are clear on the handful of drivers that creates your business results, the next question is

What are you going to do about it?

While your budget wont just give you a monthly revenue target, for example, it will help you quantify the drivers that will produce the result.

For example, if next months sales target is $200,000, that end result should not be your focus (at least not on a day-to-day basis). Instead focusing on your underlying drivers should be the day-to-day focus. For example:

• 25 patients per day (Driver No.1)
• At 80% Hygiene re-appointment rate (Driver No.2), with
• An average of $500 in Production per Patient Visit (Driver No. 3).

NOW you and your staff have a clear focus and are 100% accountable. Thats good for them, and good for you and your business.

People in a business want a clear scoreboard and a game to play so they know whether they are winning. Research has found that a lack of measurement in a job is demotivating to a staff member.

Knowing these drivers, and quantifying a target for each you can then ask questions like:

• Have the 25 re-appointment follow-ups been made today? If not, why not? Is the target realistic?
• Does the team need training?
• Do they need better telephone equipment or dialing software?
• Or just more focus?
• Or guidance on what their task priorities should be?
• Or a combination of these?
• Are we being effective and converting 80% of the calls?
• Again, if not, why not?

You can then decide to improve skills, systems, attitude, or all three!

As you can see, the power of the budget is in the process of preparing it, and then the budget itself is a tool to hold you accountable to the measurable indicators youve chosen.

An added layer of accountability is us Our Team at STAC Bizness Solutions.We focus exclusively on helping dental practices thrive!

We work with several practices where, on either a monthly or quarterly basis, we act as a sounding board and independent party to ask you the hard questions about the drivers and the results. This focuses your mind, allows you to form a clear Action Plan to improve results, and then increases your chances of success because you know you need to report to us next time.

Its a powerful process that youll enjoy due to the focus it creates and, in turn, the results that focus achieves in your business.

To take more control of your business and its performance, get in touch to make time to see us. Depending on the size of your practice, we might work out that a quarterly process works best (and be the most feasible, cost-wise), or your practice might be at a point where monthly or even weekly guidance would be ideal.

Either way, well outline your options and costs so you know precisely whats involved.

We look forward to helping you chart your course, helping to get a clear direction, and then keeping you and your business on course.

After all, you wont end up at the ideal destination by drifting.

To learn more, visit us athttps://stacbiz.comor call us at844-424-9637.

Contact Information:

STAC Bizness Solutions

809 W Dallas St. #1846
Conroe, TX 77305
United States

Shawna Aho
(844) 424-9637
https://stacbiz.com/