Profit First for Dentists

Hi, all!

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...

This is my new series about the business side of owning a dental practice. Each week I will be posting a new video on specific topics of business and how It relates to dentistry. I will also be sharing the challenges that I see dentists facing. After reading this week's blog, don't forget to check out my video on this topic as well.

Now, if you are like many of the dentists that I speak with, things are a bit hectic and you are never able to get everything done. There is always a lot going on in a practice. I always say that dentistry has a lot of moving parts. It makes the day fly by and at times it seems to just slip away. It may seem that you never have that extra time to manage all the administrative tasks of your practice.

My goal is to simplify the money management process in a dental practice. I do this by using the Profit First system. I help dentists to fully know where they stand in regards to their finances. I teach them how to pay themselves first, how to pay their...

One of the most important tips for business owners is to avoid temptation accounts. Now what exactly do we mean by that? Well, in this case, I'm talking about the temptation to borrow money from one account to fund another, or robbing Peter to pay Paul, as they say. While this may seem like a perfectly reasonable action, in reality, it means stealing for yourself to pay a bill or make a purchase for your business.

So what can we do to avoid this? 

When an account is used for more than one purpose, it becomes too easy to pull additional funds from one purpose to cover for the other. To avoid this, the profit first model utilizes multiple bank accounts, each to hold money for one specific purpose. Another way to reduce the temptation to steal from the profit or tax account is to have different accounts set up at various banks across town so that it is harder to transfer money from Point A to Point B.

This temptation most often occurs when the operating expense account runs low...