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How to Determine Your Percentage Allocations for Each Account

allocation business accounts business efficiency business growth business operations dental practice growth dental practice profitability operations Jul 22, 2024

Once you’ve set up your five Profit First bank accounts, the next step is figuring out the allocation percentages so you can start transferring funds each week. This is where you'll see the real benefits of the system!

So, how do you determine what percentage to allocate to each account? It's a common question, especially if you're worried about having enough in the Operating Expense account to cover all your bills.

First, I need you to make a promise to yourself: commit to sticking with this process once you start your self-assessment. Write it down and remind yourself why you're making this change. Change can be stressful because it’s different from what you're used to, but remember, you're doing this because something wasn't working, and you're ready for it to be better. Profit First better!

In my book, "Profit First for Dentists," I’ve created a chart that outlines the percentage ranges for each account. Your ideal percentages will differ from other practices, but here are some general guidelines to get you started:

- Income Account: 100% of all deposits

- Profit Account: 1-20%, with an average of 6%

- Owner’s Compensation Account: 12-25%, with an average of 17%

- Tax Account: 7-15%, with an average of 10%

- Operating Expenses Account: 55-75%, with an average of 67%

I’ve seen dentists successfully operate with 48-50% in their Operating Expenses, including loan payments and insurance contracts.

Next week, I'll guide you through gathering all the data for your self-assessment. 

I work with dentists in achieving this freedom through the Profit First system. If you’re curious to learn more, book a call with me, and visit www.profitfirstdentist.com and tap the 'Free Resources' tab to download the first two chapters of my book for FREE!  

 

USA:

-Barb Stackhouse, RDH, M.ED.

Mastery Profit First Professional

"I’m Barb Stackhouse, author of Profit First for Dentists. You might recognize me as the professional behind the Profit First approach for dental practices. I’m passionate about helping dentists implement this effective cash flow system, which is why I wrote the book. My goal is for more dentists to read it and integrate this system into their practices because it genuinely works." 

Canada:

-April Stroink, BComm, RHU, EPC, PFP

Advanced Profit First Professional

With over 25 years of financial expertise, April Stroink helps in transforming the financial health of dental practices across Canada. As an experienced Profit First coach, April is committed to helping you increase your profits, optimize your cash flow, and achieve financial peace. She believes that your business should enrich your life—enabling you to create the life and business of your dreams without compromise.   

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