What is the best use of my dental office profit dollars?Only 60 of the Fortune 500 companies in 1955 were still listed in 2017. Over 50% of the S&P 500 has disappeared since 2000. Economist Joseph Schumpeter called this creative destruction in 1942. Mufasa called it the circle of life in the 1994 Disney children’s movie Lion King remake of Shakespeare’s Hamlet in 1603. This is why how you allocate your capital is not only the most important business decision you’ll ever make, it’s also the most important financial life decision you’ll ever make. Retained Earnings (RE) are those net income profit dollar earnings that you decide to reinvest into your dental office by adding another operatory, laser, CAD-CAM, CBCT, oral scanner, 3D Printer, continuing education, or marketing campaign, as opposed to taking it out by paying it to yourself in income to reinvest or consume. Would your profit dollar be more likely to turn into two dollars of capital value creation if I deployed it in my dental office, or should I extract it and redeploy it by investing it in another business, real estate, stock or bond? Or, should I just consume the dollar myself with a new house, car, boat, or toy? Obviously the dentist that needs to learn a new technique, and hasn’t taken the time and invested the money to learn it, is already paying for it, but eventually you’ll want an exit strategy from working with your hands all day to having your money work for you. Debt reduction is always a great idea considering it’s guaranteed that the 18% you’re paying on your credit card is a sure bet use of your capital because that is certainty as opposed to the inverse of making 18% in a stock is not. But over the long run, having an investment portfolio which you can retire and live off is very likely given a dentists income given a few decades of time with the miracle of compound interest which Einstein called the most powerful force in the universe because not only can money make money, the money that money makes, makes money, so you can do other things with your time than drilling, filling and billing.

Dentistry Uncensored with Howard Farran

Howard Speaks: What is the best use of my dental office profit dollars?

Dentists could learn a lot from Pizza Hut. Founded in 1958 by two brothers Frank and Dan Carney who borrowed $600 from their mom. They named it Pizza Hut because their sign only had room for eight letters, whereas dentistry has nine. I want to personal thank Dan Carney with a shout out for making a religion out of availability to the young entrepreneurs, always making himself available to young dreamers like me and my High School buddies listening to all of our ideas, always adding constructive critiques to our business plans. Dan was a firm believer in investing his returns into the business and not the real estate.

Howard Speaks: Dentists could learn a lot from Pizza Hut

Dentists could learn a lot from Sonic Drive-In delivering service with the speed of sound. Founded in 1959 in Stillwater, Oklahoma by Troy Smith based on a new technology speaker box allowing you to stay in your car to order with your food deleted by a carhop. Today Sonic has over 3,494 locations in 46 U.S. states, and is owned by Inspire Brands which also owns Arby's, Buffalo Wild Wings, Jimmy John's, Rusty Taco, Mister Donut, Dunkin' and Baskin-Robbins. The franchise fee for a single SONIC restaurant is $45,000, with a total investment ranging from $1 to $1.75 million not excluding land. To all the Holier than thou Hypocrites, Gallup surveys show over 80% of Americans eat fast food at least once a month. In 1991 Kentucky Fried Chicken shortened its name to KFC because “fried” was a bad word. Sonic, which is America's fourth-biggest chain.

Howard Speaks: Dentists could learn a lot from Sonic Drive-In

Does your bookkeeper sit next to you providing statistical analysis like NBA Dallas Mavericks owner Mark Cuban pioneered back in the day with coach Rick Carlisle sitting next to Roland Beech–like I’ve done with Lorie Xelowski since June 28, 1998?

Howard Speaks: Does your bookkeeper sit next to you?

How to buy a dental office with no money down. Back in the day, owners carried risk, but sellers had skin in the game. We didn’t have 3rd-party banks financing $1M+ dental practices to broke kids fresh out of dental school, getting their poor parents to co-sign, where if their kid couldn’t do the numbers and it went south, then it was an emotional disaster for the whole family. Greed sucks. Find a job as an associate where the owner/mentor Doc knows you want to buy it after an appropriately long courtship period. Have Doc finance it at 10% over seven years so everyone has skin in the game. If they don’t want to be on the hook for the whole enchilada, then stand your ground with the seller-Doc that they must at least carry half the risk. Otherwise, the seller doesn’t have faith in you like I do! You didn’t go to dental school for eight years to be somebody’s bitch. Just stop letting fear live rent-free between your ears and invest in yourself! If you work like no one has for a decade, then you can live like no one has for the rest of your life. Same advice for starting a family, I made my four boys in 60 months. So don’t overthink it, just get this party started.

Howard Speaks: How to start your new dental office from scratch with no money down

Doc, I practiced through the 2008 bankruptcy of Lehman Brothers. I met the financial crisis that led to the Great Recession when investors withdrew a record $196 billion from their money market accounts. 2020, you're no 2008. I’ve been contacting my friends at Henry Schein and Benco. In 2020 Benco closed fewer accounts due to collections/payment issues than in either 2018 or 2019, in fact in 2020, the number of accounts closed due at Benco according to my buddy Chuck Cohen, the managing director at Benco Dental and the only man in dentistry smart enough to be published in the Harvard Business Review, said their practice retirement sale closure declined more than 20% vs. 2018 or 2019. Halfway through 2021, the numbers indicate that the trends from 2020 are holding steady. Why? The federal programs to support dentists, most notably the PPP - Paycheck Protection Program  worked, Benco had fewer collections issues in 2020 vs two prior years. Fears of the pandemic leading to either an exodus of doctors from the profession due to health financial fears or an overall consolidation wave due to DSO acquisitions are overblown, in fact, fewer dentists closed due to retirement/sale/closure than in the two prior years, probably due to a combination of a slowdown in practice acquisitions by larger players during and directly after the shutdown and dentists deciding to remain in practice post-pandemic, possibly because their net worth declined during/after the pandemic.

Howard Speaks: Doc, I practiced through the 2008 bankruptcy of Lehman Brothers

Millions are unemployed but dentists struggle to find new employees 

Howard Speaks: How the COVID Pandemic Has Impacted Hiring In Dental Offices

Who’s answering your phone? Funnel-y how most dentists don’t track their new patient journey from landing on your website to calling your dental office. On average 100 people have to land on your website for three to call. Three people have to call for your front desk to convert one into a scheduled patient. Three patients have to come in with a cavity for you to convert one into getting treatment. Combine every one of these underperforming aspects of your new patient dental marketing journey and the U.S. Bureau of Labor Statistics still shows an impressive 2020 median annual wage for dentists of $164,010 with the lowest 10% earning less than $79,000 and the highest 10% earning more than $208,000, showing the top 10% netting 2.5 times more than the lowest 10%. This clearly shows hope in the range of possibilities for any individual dentist wondering what’s possible. We’ve talked before how owner dentist net $100K more than non-owners. We know every successful business needs to get really good at one thing explaining why ADA economist Dr. Marko Vujicic shows average 2019 net income for general dentists was $204,710 and for specialist it was $343,410 illuminating the value of specialization. The world learned in 1776 when economist Adam Smith published The Wealth of Nations that specialization leads to an increased production of higher quality work predicting why centuries later an oral surgeon could take out four wizzies faster than I can turn a can of Cheese Whiz into Cheese Was. We know demographics matter and the importance of creating a supply of what people are demanding which is why dentists often move far away from where they were born for a better opportunity. Combine this with living below your means and saving and you have the recipe for early retirement.

Howard Speaks: Who's Answering Your Phone?

When you increase your treatment plan acceptance rate you prevent a small problem cavity today, from turning into a bigger problem root canal or extraction in the future. When you offer same day dentistry patients are very motivated to do it today so they don’t have to come back. If the patient fails to schedule and come back your treatment plan acceptance rate goes down and the disease continues on which is not optimum for oral health. The only secret to lower prices is lower cost so to maximize profit make every operatory the same so you can do any procedure, in any room, anytime. When 35% of cost is the dentist, 25% staff, 7-10% lab, 4-6% supplies, you can’t afford for your business to slow down or stop because of a constraint from the lower cost rent and facilities of 5-8%. When you have to move a patient from a hygiene room to a treatment room it cost time and money often times causing you to reschedule. Not to mention the front desk can’t schedule emergency patients or walk-ins. Extra operatories are not overhead, they are your means of production. When your over head is $1 and you produce and collect $1 then your overhead is 100%. Raise your production to $2 and now it’s down to 50%. Increase the number of your dental operatories until you never find yourself waiting for a room. In fact the biggest ground breaking technology in dentistry was the shovel when used to build a new, bigger and better serval office.

Howard Speaks: Same Day Dentistry

Welcome to Our Practice! We realize that when it comes to picking a dentist that you have many choices to choose from. We want to sincerely thank you for coming in today and choosing us to keep you smiling for many years to come. Please feel free to share the enclosed referral cards with your family and friends to bring in on their first visit. Share the care $10.00 gift card. Tell your friends and family about the great care you experienced at Today's Dental and give them this card. When they become patients, you will receive a $10.00 gift card and your referral will receive a new patient gift! The highest compliment comes from our patients when you refer a friend or family member to our office. Please let us know you passed along our card by writing your name below. Two $10.00 gift card limit per family. We look forward to seeing you soon! Today's Dental staff serving Ahwatukee since 1987.

Howard Speaks: The New Patient Letter and Share the Care Card

Kudos and praise to all the Dental Public Health (PDH) specialists who were recognized as a speciality in 1950, focusing on improving dental health at the community level rather than the individual level with programs like Community Water Fluoridation, children’s dental health programs in schools, setting up coronavirus and HPV vaccination programs, and public health clinics, the PDH work is never completed. With unlimited demand and limited supply, finding ways to increase efficiency is key. A common problem in any healthcare delivery facility is patient cancellations and no shows. If you miss two appointments in a row you should have to pay a non refundable deposit to make another appointment which you lose if you don’t show. Vinegar that is free, is sweeter than honey. The proverb not to look a gift horse in the mouth is because the horse’s teeth are an indication of the horse’s health, but if the horse was a free gift it doesn’t matter since it cost you nothing. People always value something more if they paid for it and since oral health diseases are mostly preventable, our patients need to have skin in the game.

Howard Speaks: Dental Public Health Specialists

When hygienist pre-appoint their own patients to future continuing care they will instantly find out which patients are onboard who isn’t . If the patient bought in to do the right oral healthcare thing and schedule their next appointment in advance, you can monitor this vital sign of patient buy in or give a warning sign your back door is open and the patients are going down stream so you can decide if you want to fix the dam or spend the damn marketing dollars to replace them. The hygienist is most responsible for creating this value which is why they have to ask the patient to schedule to come back because when a patient says no they can see exactly when and with who, their hourlong appointment message did not work on in time to adjust w response to this tasks, hence the meaning of the word responseability. The hygienist needs to own it, be measured, and held accountable. How could you expect the front office to be responsible for preappointing the hygienist patients when you obviously can’t be responsible for something you don’t have the authority to change. Does the front office manager have the authority to trade your hygienist from the Jets for one from Tampa so your team has the right buccaneers to find the treasure? Or does everyone just blame Dr. Ignominy who is the only one with skin in the game.

Howard Speaks: Pre-Appoint Hygiene Patients

Perception equals reality despite the world not being flat because trust has more value than logic. The time needed to make a knowledgeable decision reality means that most of us can only master one thing unless you’re Torakusu Yamaha who mastered both motorcycles and pianos. Trust is an investment when your infection control builds patient confidence and is being explained by long term staff the patient already knows and trusts providing an economic barrier in the marketing efforts from someone else they don’t know. Trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent has been the Scout Law since 1908 and will help you become more talon-ted and breaking it is ill-eagle.

Howard Speaks: Perception Equals Reality

Do you reward your new patients with a gift?

Howard Speaks: New Patient Gifts

Profitability begins with the Financial Arrangement and ends with increasing account receivables, sending statements, then resending again with scary ‘Past Due” messages stamped on it with red ink made from a single drop of blood from your CPA, collection agencies, bad debt, negative cash flow, and high overhead. The Financial Arrangement at McDonald’s begins with clear prices so you can decide exactly what you want to order, and then you pay in full or you will not get your Happy Meal with McVodka. If Doc Ronald McDonald did give it to you first, and you never did pay for it, assuming they had average dental overhead of two-thirds, then they would have had to buy the all natural ingredients, which I assume was the human hair, from the profit dollars of two previous sales. This is why financial arrangement impacts profitability more than price. If you want to boost profitability i'm lovin' McDonald’s order, pay, food. If you prefer lovin' the Profit Hamburgler use Dentistry’s order, food, and pray.

Howard Speaks: The Financial Arrangement

POWERED BY DENTALTOWN.COM Uncomplicate your dental life with Dr. Howard Farran as he interviews your fellow townies and leaders in dentistry! Dentists and dental professionals share their wisdom to make your dentistry faster, easier, higher in quality and lower in cost. Episodes released every week day with the full transcripts at dentaltown.com/podcasts.

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Dentistry Uncensored with Howard Farran

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