Mastering your cash flow takes time. Some dentists are unsure if they have even made a profit until the year of the year. This is a stressful way to live and to operate a business. The good news is that it doesn’t have to be this way. Starting today, you can have your practice revolutionized by embracing the Profit First method.
As we have laid out in our previous blog, The Basics of Profit First for Dentists, Profit First is a cash-flow management system that can be easily implemented in your practice for better financial security and a healthier bottom line. You can begin to make a profit, no matter how small, by changing how you look at your finances and embracing human behavior.
The key to effectively implementing Profit First is to:
- Start looking at your business with the Profit First Formula, Sales – Profit = Expenses
- Set the appropriate Target Allocation Percentages (TAPs) with a trusted Engage Advisors Business Advisor
- Stick to the plan!
The goal of the formula (Sales – Profit = Expenses) is simple. You want to develop a system and behaviors that create long term success for your practice. By paying yourself, your taxes, and taking your profit percentage up front, you will have greater peace of mind and security. You might be thinking, “I just can’t do that. My expenses are too high.” Our answer – yes, you can do this.
It’s Time for Change
It is normal to think that staff salaries, utilities, rent, equipment, and materials, etc., are necessary and unavoidable in operating a successful dental practice. It’s always amazing to see these same assumptions fall by the wayside as practices become more disciplined and wise in their spending due to a smaller percentage of cash being available. Much like a smaller plate when dieting, if less is available, less is consumed.
It’s not going to be comfortable. You may want to run full speed ahead in your business. Are you ready to buy new equipment you want but don’t necessarily need? Want to splurge on a new fish tank for the waiting room or new TVs for your Ops? Maybe you want to expand your existing practice?
Choose Your Future With Profit First
If implementing Profit First means more security for you and a healthier bottom-line, it could mean slowing down your spending in the short-term to focus on the long-term. Maybe you don’t get the new equipment you want but don’t need, but with more revenue and profit, you’ll have the future resources available to invest in the practice without taking on additional debt. You will also enjoy the thrill of making these improvements without being strapped for cash. Can you imagine that feeling??
Shifting your mindset to Profit First will require you to rethink your approach to cash and how your practice operates. Every situation is different and, luckily, the Profit First methodology can change along with it. Whatever your goals or financial situation, we can help you pay yourself first.
In closing, at Engage Advisors, we are focused on providing business solutions for dentists. The truth is a lot of dental practices struggle with cash flow. Chances are you didn’t start a dental practice because you love accounting, right? That’s where we come in. Chat with us 24/7 on our homepage!