In a business blog, it's perhaps worth talking in financial terms about small business investment, about reserves for difficult times, and about access to money.
If you've been fortunate enough to have some success in dentistry over the years since COVID, you will have made, or at least turned over, more money than you were turning over before. What you do and have done with that spare money is critical and perhaps more critical in the times that are to come.
In the last 3 years, the stock market has risen on average by approximately 20% per year. You may have noticed this, you may not have noticed this, your pension may have gone up, or your practise investments, practises, if you have any, may have gone up.
If you store cash in the bank, that will not have gone up and therefore, as inflation increases, the cash in the bank decreases in value. The benefit of the cash in the bank, though, is that it's cash in the bank and in any aspect of a crisis, cash is king, and accessibility to finance keeps you alive, allows you to make clear decisions, and allows you to stay on top and afloat while other people cannot, and so therefore there is a definite ratio between what you have in cash and what you have in investment and what you seek in reserves.
One of the jobs I've been looking at over the past 6 months, from our point of view here at the Campbell Clinic Group, is exactly what the ratio is to define for reserves that are safe in terms of a crisis. This is also framed off the back of 3 years of strong growth in the stock market, which probably means that we're in for a killing, a hammering, as it dips again.
If you look at the last 40 years of the stock market, for every 10 years, there are 3 bad years, every single decade, and why would that not be the same now? And therefore, in the last 4 years of this decade, we're due at least 1 if not 2 years, when the stock market falls.
Add to that the fact that many people think the Nvidia bubble and the AI bubble overall are likely to ‘readjust’, and we have to be ready for the fact that things will get even harder, not even easier than they are now.
With the spare money that you have, ( if you do have any) some of it can be put aside for the long-term, but it's absolutely critical to have some handy for the short-term and I know that Personally, and in a visceral sense from the fact that in 2020 at the start of the COVID pandemic, we had no cash and tonnes of bills, loads of leverage, and no room to move when we opened a new practice.
And so as you start your financial year, many people are now coming to the end of the year on the 31st of March. I would suggest that cash and instantly available money should be 3 times your fixed costs, at least 3 months of fixed costs ready to put your hands on. You probably want to have available in some form or another, another 3 months of fixed costs somewhere else that you can access, equity in your building, stocks and shares, stuff that's locked in a bit longer, whatever it is. Only in that situation do you know that you're safe and secure with foundations to move forward, to survive, whatever the world will throw at you next.
Because God knows it's going to throw something at you next.
Colin Campbell, Chris Barrow, and an intrepid group of dentists will be cycling across the plains of Tanzania from Kilimanjaro in early February 2026. If you would like to support the charity, Bridge to Aid, and this extraordinary challenge, please click here.
Thank you for your generosity.
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