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Debt and What to do About It!

business of dentistry debt reduction profit first profit first for dentists Jan 15, 2023

This is the third blogpost in the Business of Owning a Dental Practice series.  Today’s topic is Debt.  Primarily I’m going to talk about Business Debt but you could apply the same principles to personal debt as well.   

Owning a dental practice generally comes with acquiring debt, at least for most dentists.  Whether you do a scratch start or you purchase an established dental practice, to pay for it, there will likely be a loan. 

Add to this business debt, any personal debt  you may have such as dental school debt, a home mortgage, vehicle loans, and possible credit card debt, and you find yourself swimming in debt. 

It can feel heavy or even stifling to think about all the debt. 

Let’s first break it down into ‘good’ debt and ‘bad’ debt.  Debt incurred that increases your revenue and does not cause a bigger burden for your business could be considered ‘good’ debt.  Examples of this are a business loan for a build out or an equipment loan.  Again, the measure is made based on the revenue generated. 

Debt incurred on items that significantly depreciate in value is considered ‘bad’ debt.  Bad debt includes Credit Card debt that you are not able to pay off every month. If you are carrying a balance on Credit Card debt it means you have overspent.  The high interest rate of credit cards means you continue to overspend as you try to manage all the payments. 

If you purchase equipment that you end up not using enough or not at all, this is ‘bad’ debt.  Bad debt could also be ‘good’ debt in disguise. 

If you over-build or purchase real estate beyond your means of repayment, you may end up in a month to month or week to week survival trap.  The debt holds you hostage to the chair producing more and more and never feeling like you’re getting ahead. 

My first piece of advice is to not beat yourself up.  Accept where you and start working on a plan.  You’ll need to make some decisions about where you spend your money and time and then you’ll need to stick to the plan. 

The second thing to do is to place a debt freeze on both your business and your personal life.  Do not acquire any more debt. 

Third, please understand you can build profit and pay down debt at the same time.  This means you do not want to plow all extra cash into paying off debt at the expense of never building up a cushion for the unexpected. 

Trust me when I say you can do both!  If you decide to use the Profit First System, you can build debt reduction right into the system.  You’ll need to assess all expenses including debt payments before determining what percentage is doable for you.  I have some free resources to help you with this. 

Look up above this blog and my website to the Free Resources tab.  You’ll find all of the resources included in my book and you can download them as pdfs.  Thanks for reading my blog today. 

Next week I’ll be back with another new blog and I’m going to talk about Feeling Stuck at the chair and how to plan for an exit strategy.  



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