For years I have tried to get my head around the business side of my dental practice. I have done my best to try and be as organized as I could so as to make sure that my tax is sorted and that I have sufficient cashflow to manage the ins and outs of a dental business.
As you are aware dentistry is a very tricky business. Sometimes you think you’re ahead only to discover that your chair needs a service on the same day that your compressor blows up! Your lab fees arrive just as your practice manager announces that she is pregnant and needs to go on maternity leave by the end of the month…
Just another day in paradise as the song goes.
Enough of this.
That is what I told myself on that fateful day – “I have to get a grip”
“I have to know what is happening in my business”
And so I set out to monitor all my incomings and outgoings – every penny must be accounted for – no longer will I not know what’s in and what’s out. I arranged a regular meeting with my bookkeeper to show me the previous months income and expenses (some call it profit and loss account…).
All that did was show me in black and white how badly I was doing – how my business did not make the profit I thought it was making. And how running costs can strangle a dental offices’ bottomline.
This was very depressing. Its all very well doing something I love but no-one ever told me I would be doing it for charity.
Then I read a great book – Traction by Gino Wickman. And that changed everything. Gino talks about data being the most important thing in any business and how to make sure that you have the correct data at the right time. This means that instead of looking at past data (reactive view) you need to look at present data (proactive view).
In other words you need to set up what he calls KPI’s (key performance indicators). These are vital to any business. They tell you what’s happening within your business on any given day. And the beauty of it is that it allows you to make the necessary improvements before it’s too late.
When you look at the reactive view, in other words six months down the line for instance you may find that you could have changed some things before it got to the point of no return. For example you may have been better off to have paid up front for that digital scanner so as to improve your tax bill before your financial year end. On the flipside you may have been better off to lease that scanner so as to improve cash flow for those six months instead.
By looking at the reactive you view you have very little control on decisions which have already been made. However by carefully monitoring your KPI’s you know where you are at the time and are better equipped to plan ahead rather than try to fix previous unplanned transactions or decisions.
Practically speaking this means setting up systems within your dental practice which monitor important criteria such as cashflow, debtors list, insurance payments, stock control et cetera.
What I did was to set up Excel spreadsheets which were easy to use and enables me to quickly and painlessly scan my KPIs on a daily and weekly basis. Once the systems were in place it became very easy for any one of my staff members to input the data and to collate it with my dental practice software management program. Daily journals were printed at the end of each day and inputted into the spreadsheets to give me a specific as well as a birds-eye view of where my business is at the time. If you would like a copy of my daily KPI spreadsheet click here.
These KPIs and the way in which they are monitored have revolutionised my practice. I now know where I am at any given time. This has taken a heavy load off my shoulders. I am now able to focus on doing the best clinical dentistry for my patients while at the same time making a great profit and feeling good about my dental business.
Now I just need to work out a way to keep that blown compressor going for one more year ;)))…