Dentistry is an expensive profession. It’s costly to go to dental school. Then to either open or purchase a practice is another significant investment. It’s very likely that debt will be incurred in this process.
Most dentists I work with are still paying on debt. These monthly payments can become drudgery in a short time. It can seem never ending! And on top of practice debt, there’s personal debt. Whew! The pressure to produce is real.
With the profit first model, debt can be factored in when considering profitability. What I mean is this. A portion of the Profit Account distributions may be used for some additional debt reduction if that is the goal of the owner. A system may be put in place with a plan to eradicate debt sooner.
First, begin by taking stock of all debt. What exactly are you paying out in payments every month? What percentage of collection is this? Is any of this bad debt, like credit card debt that...
If you think about your dental practice, I’m sure you’ll find you have a daily rhythm to things. Most of us would say we have personal daily rhythms as well.
We tend to rise and start our day very much the same from day to day. The rhythms of our life provide an unwritten structure that actually then perpetuates the rhythm to continue.
The same is true of your business, your dental practice. When implementing a pattern of behavior in a rhythmic cycle, we are much more likely to continue to take action. Taking action is where the magic happens with Profit First.
A weekly rhythm of allocations and transfers seems to work best for a dental practice. Income flows into the practice daily and then once a week, it’s time to allocate by percentage and transfer money to the additional bank accounts set up for a specific purpose. Those accounts are for Profit, Owner’s Compensation, Taxes, and Operating Expenses.
As money flows into each account, it is...