It really is time to step back - Finance
A few days ago I wrote about the Digital Dental Business Course that we run, trying to explain why it might be suitable for some people in the current circumstances and situations we find ourselves in; in the dental world.
Many of my colleagues who work within the NHS general dental sector will have heaved a sigh of relief to find out that at least some form of temporary arrangements are continuing from April until September this year, although some will wonder how they can possibly manage to cope with a 60% target rate in the environment they’re in.
I think it’s clear for everyone to see though, that after September (not withstanding a further rise in the pandemic problems) NHS dentistry will be a lot different.
It certainly looks from outside of NHS dentistry that it will change dramatically in a relatively short period of time and we should probably all consider how that might impact on us because it is a massive factor.
Understanding how your business works, in all aspects but particularly in financial aspects, is absolutely key to plotting a future and deciding how to take the decisions that we’re all going to have to take in the years to come.
I had a conversation with a colleague recently on one of our courses who basically laughed at the detail in which we go into finances at the practice and (I’m paraphrasing here) suggested that if there’s enough money left in the bank at the end of the month, all is well.
That approach is fine, until it isn’t.
I ran a business exactly like that and ran a business the opposite way and for me the opposite way is much better.
The opposite way is understanding your surgery costs per day and how much it costs to open each surgery each day.
This is the fundamental basis to running a dental business because only then can you decide whether the people who are in those rooms are actually worth being in there.
Then you can look at ADY (average daily yield) which is what the clinicians or individuals who work those rooms actually turnover and then you can look at that against your surgery costs per day.
Once you start to appreciate the predictability of these numbers and how regularly they work, you can start to budget.
Once you start to budget the game completely changes.
You can start to look at how much you take out of the business and whether that is reasonable and decide how much you’re going to put into the business and then you can start to decide how you want to generate the money that comes into the business and that takes me back to the top of the post.
If you’re a dentist working in the NHS, you don’t have to be a dentist working in the NHS, you can be a dentist working in some other fee generation system.
You can choose to work in the NHS and make sure your financial model is tight and all is well or you can look at a financial model which is broken or breaking and decide to change it.
You can only do that if you know the finances.
The Digital Dental Business Course has a full finance project which introduces you to all of these concepts and allows you to discuss them in a safe place with nice people, perhaps it’s time to look at the numbers.
Blog Post Number - 2696