I’ve been sharing information about the Core Principles of Profit First for several weeks now. Today the topic I'm sharing about is the principle called, Remove Temptation.
Once an entrepreneur begins to fund the Profit Account and the Tax Account, money will begin to accumulate. Over time as this cash grows, it might be tempting to want to use it all and plow it back into the business. Please don’t do this!
This action of plowing back into the business all your profits will actually cause the overhead to go way up and it totally defeats the purpose of the Profit First method. If you find yourself tempted to use the money in the Profit Account or the Tax Account when the Operating Expense Account gets a bit low, then determine straight up that having the No Temptation Accounts will be your friend.
The No Temptation accounts are established at a bank across town. The No Temptation Accounts hold the money in the Profit and Tax...
Today I’m sharing about the principle of Sequence and why it matters. It’s the second Core principle of Profit First for Dentists.
First let’s talk about the Primacy Effect to help us understand why sequence is so important. The Primacy Effect tells us we have a cognitive bias toward information presented first rather than later. We do the same thing with items on a list. If you’re a list maker, you’ll understand. The things at the top of the list get done first and you delight in checking them off. This is great news for Profit First. The sequence of how we do things does matter even when it comes to your money.
If you’ve listened to my previous topics in this series, you’ve heard me talk about GAAP which stands for generally accepted accounting principles. The basic equation for GAAP is Sales – Expenses = Profit. This has caused entrepreneurs including dentists like you to...
Today my focus is on Principle number one called The Small Plates Principle.
First I want to share a bit of background information so all this will make more sense. Going all the way back to the early 1900’s we find the GAAP formula. Now GAAP stands for Generally Accepted Accounting Principles and the basic formula for this structure is Sales – Expenses = Profit. This means we sell our product or service, then we pay all the bills and whatever is leftover at the end of the month, quarter, or year, we get to keep.
I’m here to tell you there is a better way for entrepreneurs to run their business. All you need to do is flip the equation to Sales – Profit = Expenses. This is the Pay Yourself First model. It’s the Profit First way! But exactly how is this going to work? This is why there are principles associated with the model. To explain how this first principle called Small Plates works, I...
Maybe you're wondering, "How do I implement Profit First?
What do I need to know?"
This week starts a new series where I'll cover each of the core principles of the Profit First for Dentists method over a 5 week period.
Today I'm giving you the basics and then in the coming weeks, we'll dive in to each of the 4 core principles and I'll explain how it all works. It's quite simple - really.
Here's an overview to get started.
How would you answer the question, “Why isn’t my dental practice profitable enough?”
This week, I sat down with Michael Arias of The Dental Marketer to discuss my Profit First model for building profitability in your practice.
We talked through some of the key concepts of the model and other good business practices such as:
You need to operate under a new formula of Sales - Profits = Expenses, instead of Sales - Expenses = Profits. This new way of doing business will challenge you because you have to totally rethink how you’re doing business. The challenge will be worth it in the end. You’ll...
Today, I want to talk to you about money behaviors. We all have certain behaviors and emotions about money. When you own a business, those behaviors and emotions can be even more heightened. Some entrepreneurs LOVE the money/business side of operations…and some definitively do not. In fact, many will put it off until they are finally forced to deal with it. Conversely, there are many who simply sit in the middle and are indifferent.
There is one fairly consistent behavior that tends to stretch across all dealings of money. When you want to make a purchase or pay the bills…what do you do? Most business owners will open their online banking to check their balance and see how much money they have. If there’s money in the account, they will pay the bills or make the purchase and if it’s low, they begin strategizing how to get more money in there. There might even be a freakout involved when seeing this low number!
At any rate, there’s...
Today, we’re going to talk about organizing your money. First, I want you to think about how you organize things in your home or office. If you’re anything like me, you like all the little drawers and compartments to be perfectly organized with everything in its place. Personally, I like to put my dress clothes in one area of the closet, my workout clothes in another, etc., etc. My kitchen is also very organized. When I want to use a certain utensil or cooking pot, I know exactly where to find it. It’s gotten to the point where I don’t even have to think about it; I know where everything’s at!
Similar to my bedroom and kitchen, I also organize the money within my business and I do that using Profit First. I know how much is in each bank account and the purpose of that money. You can do the same for your dental practice finances by using the Profit First principles. It’s all about getting your money organized and having simple...
Today I’m going to share something very important for you, your business, and your patients. Your patients need you to be profitable. To be profitable means to be successful, cost-effective, and fruitful. If you are profitable, you can relax and not have to worry about your money. You can focus your energy on taking care of your patients, which is the primary goal of your business. You still need to pay attention to your money but it is different when you’re not carrying that stress or worry. Your patients will be able to tell if you’re stressed or not by how you behave. When you’re stress-free, you can perform your best.
Are you looking for a stress-free business lifestyle? That’s where Profit First can help; it gives you the plan to ensure there is profit with every deposit. Profit First helps you to manage your money in just a few minutes. It was designed to help dentists like you manage your company financially so that you can be at your...
I’m here today to show you how to pay down your debt faster. First, you have to take stock of the debt you do have and categorize it into categories called “good debt” and “bad debt.” Bad debt is high-interest debt like credit card loans, lines of credit, and student loans. Good debt is real estate loans or private practice loans. These loans are for a longer time period and have better interest rates.
Now, you have to decide which bad debt you’re going to eradicate first!
Also, make sure you have a profit savings account and that you’re allocating a percentage to each week. I have a video on YouTube that can help you if you’re unsure of how to do this! The best way to handle this is to stretch yourself as much as you can handle. It would help to financially plan out each month so that you’re able to take care of yourself while tackling that debt. Bad debt is what you want to go after first because of the bad...
When you want to tell a patient about the state of their oral health, what do you do? Most dentists use a disclosing tool to tell patients the truth about their oral health because these disclosing tools are designed to help the patient understand what exactly is going on and then take control of their dental health.
It’s pretty common sense to most of us that patients really do want to know how their oral health is–even if it is poor–because they want to be able to find solutions and get healthy again. However, many dentists are afraid to go through the work of assessing their practice’s financial health, because they don’t really want to see the truth. They would prefer to keep their heads in the sand, even though they long for more profitable outcomes. This is where the profit first for dentists model comes into play.
I know that it can be nerve-wracking to turn on the lightbulb and see what’s really going on financially...