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Authors : Dr. Howard Farran .

Think like a millionaire

The only regret I have regarding my new book, "Uncomplicate Business," is that I gave it the subtitle: "All It Takes Is People, Time and Money." I should have chosen the subtitle: "All It Takes Is People, Time and Numbers," because money is just a form of numbers. There are many numbers besides dollars and cents that need a businessperson's attention. You didn't become a dentist so you could pore over reports, but you have to if you want to be successful and stay that way.

Watch your accounts receivable carefully and don't take anyone's word about what things cost or how much money you're bringing in. Look into it yourself. Do spot-checks to confirm what others tell you. When you go into a millionaire's business, you'll find they know their costs. Now, you probably can't manage all the financial aspects of your business by yourself, and that's okay. Most millionaires I know say that by the time they had their first five employees, one of them was a full-time bookkeeper. That's how important the numbers are. However, those millionaires still know their numbers.

Many dentists outsource their financial work to an accountant who basically just prepares papers for a third-party tax collector. Others hire full-time accountants and the dentist remains naïve to all numbers except employment costs. Do you know all your overhead costs? Do you know what you make per procedure? I like to run the following scenario by dentists: "You walk out of a room. You just did a $250 filling. You spent 45 minutes on it. Did you just make $30 or lose $30?"

They almost never know.

Do you know how much financial worth each of your staff members bring? I've had dentists say to me, "You know, I have one full-time hygienist and I'm thinking about adding another full-time hygienist. Should I?" Then you ask that dentist about the costs and it takes him or her an entire week to pull the numbers to show how much money each hygienist is making or costing. That kind of research is a lot better late than never, but it shouldn't be so far from a dentist's reach. Business owners should have an idea of how much financial value each staff member adds. The answer can be hard to measure, especially when you factor that person's customer service and how he or she affects productivity and team morale, but there are numbers that can help you figure it out and you need to know those numbers.

I strongly suggest that dentists use specialty accounting firms that only work with dentists. Some of them are so thorough they won't even take you as a client unless you come in at the end of the year and do a whole-day program with them.

Breaking bad

One of the worst financial mistakes you can make is to not know your break-even point. Consider hosting a meeting to educate your team on how much money you have to bring in to break even. Help your team members understand your overhead costs and what it takes to keep the business running. Help them understand how much business you have to do to provide, say, Christmas bonuses. Also consider starting each day with a staff meeting or a team huddle so you all get on the same page financially.

At the team huddle, say something along the lines of, "Hey team, remember that we have to do $3,800 a day just to break even." Now the whole team is like, "Wow, what do we have on the books?" Let's hypothesize that it says $4,000 in the books. Well, Margaret Harper cancels last minute and there goes that crown. Now you have to look at the rest of the day to see if there's a way to make up some of that money. It certainly helps if you have seamless office communication. When every team member in the huddle knows what is needed to go home victorious every day, it will have a profound impact on your bottom line—trust me on this one!

Getting your team involved is important for the books and also for team building. If you treat your staff members well, they'll enjoy knowing that the office met its goal and that they were a part of it. One of them might go home and tell his or her spouse at dinner: "That was a close one today. At noon we were going to lose $1,000 for the day, and when we left at 5 o'clock we were up a thousand."

So, you should know your numbers. Your accountant should know your numbers. Your staff members should know your numbers. But here's the kicker: your wife, Muffy, or husband, Donald, must also know your numbers. I've met dentists who have too much pride to admit to their spouse that they are not as rich as people may think. When your spouse doesn't know your financial reality (and sometimes even if they do) they're all the more likely to charge that emerald bracelet or buy a jet ski.

Financial stress is terrible, especially if part of it is being caused by the person who should be your top ally in reducing financial stress. Before you know it you're coughing up blood clots, and feeling alone in the world because no one understands the stress you're under. Why? Partly because your spouse knows the numbers on your credit card more than he or she knows the numbers of your business, and maybe you don't know those business numbers either. When you have the financial information you need you can make smart choices about what to buy and when to buy it and those purchases will feel all the better.

Otherwise, you'll end up in financial stress. That state leads to overeating, substance abuse, kicking the dog, etc., and every time you buy that car, that condo, every time you take that vacation, you're going to stress yourself out more. The fastest, easiest way to reduce your stress is to understand how much you can spend. Don't buy things you can't afford! When you spend too much money, you start to do things you hate to make more money. You might say, "Well, I can't stand endo and I refer it out, but since I bought that boat I should probably start doing endo. I mean, it's $1,000 and insurance pays 80 percent. …"

It doesn't have to be this way. Know your numbers, teach your team members the numbers, and make certain Muffy and Donald know the numbers. And remember, no matter how good your accountant is and no matter how much you trust him or her, make certain that you know your numbers better than anyone.

Source: http://www.dentaltown.com//Dentaltown/Article.aspx?i=398&aid=5526

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