Your financial obligations control your every move. Practice overhead is out of control and, after you finish paying your bills each month, there's not much left to put toward practice updates. You're starting to think you'll never be able to retire. In fact, if things don't turn around soon, you're honestly not sure how much longer your practice can survive. There's no question it's time to get your practice debt under control. The problem is that you have no idea where to start.
I've put together three tips designed to put your practice back on the right track, so you can finally reduce your debt and turn your struggling practice into a thriving practice.
1. Assess your practice's cash flow
Before you can get your debt under control, you need to understand your practice's financial situation. To do that, I suggest conducting a cash-flow assessment.
This might sound intimidating, but it doesn't have to be. Here's what you do: Log the numbers for net production and collections over the last 12 months, the percentage of accounts receivable over the last 90 days, and total monthly payments on leases, loans, and business credit cards. Then look at average monthly payments to the lab, dental supplies, salaries, taxes, and benefits, as well as monthly facilities costs. And don't forget about various miscellaneous expenses. They might not seem like a lot, but they can add up.
Once you've finished this assessment, you'll have a much better picture of where all your money is going.
2. Hire an expert to take a look at your finances
Once you complete your cash-flow assessment, it's time to start taking steps to reduce your practice debt. A financial expert can evaluate your specific situation and determine the best way to do this, whether it means purchasing the space you're currently leasing or consolidating your loans and refinancing them at a lower rate. If you do decide to refinance, consider looking for loans that allow for additional principal payments. Why? This will lower your interest rate over the long term.
Remember, every practice is different. If you want to reduce practice debt and finally start meeting your full potential, you need to look at where you can make adjustments. An outside financial expert can help.
3. Improve your systems
After you have a plan in place to reduce debt obligations, start thinking about how you can improve your 20 practice management systems. Inefficient systems will only hold your practice back and contribute to your debt and overhead problems.
Take the time to really look at these systems and make the necessary updates. Not only will improving inefficiencies help you reduce debt and overhead costs, it will also reduce stress and frustration for both you and your team. Your practice will become more efficient, and your team members will be happier. This all leads to a more productive practice and a growing bottom line.
Over the years, I've worked with many dentists struggling with debt. Most dentists have thousands of dollars in debt they must find a way to pay, leaving them with nothing left over to invest in their practice. Yes, it can seem overwhelming, but if you want a profitable, successful practice, you need to figure out how to get your financial obligations under control. Once you do, you can shift your focus to investing in your systems and improving your practice -- not just writing check after check each month.
If you're struggling with debt, don't feel like you need to find a solution on your own. Once you start taking steps to reduce your debt and enhance your practice systems, you'll find you have a much more productive practice.
Your bottom line will grow, and you'll finally know what it's like to have a successful, thriving dental practice.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.