Make Sure To Schedule to Goal

Schedule to goal ... but what is the goal?

For the first five years in my private dental office, I would constantly hear older dentists, business coaches, and dental consultants tell me to “schedule to goal.”

Sound advice, no doubt.

These successful business people and dentists realized that, if you create a monetary daily goal, your dental team would work hard to fill your schedule with the appropriate amount of dentistry to satisfy it. This concept is unquestionable. People want to satisfy goals. It creates meaning, purpose, and in the case of dental offices that offer bonuses, monetary incentive.

This would all be great if I actually knew what my daily goal was.

Rather than bore you with all the convoluted and arbitrary techniques that I stupidly used in the past, I’d like to share a technique I use for determining my practice’s daily goal. This technique will provide a strict, concrete, and understandable framework, resulting in ideal coverage for all of your home and practice expenses, savings, and loan payments. It will allow you to take your vacations with confidence and financial certainty.

I must warn you — it takes time and involves a lot of personal financial research and calculations, but the end product will make it well worth it.

Let’s get started.

The goal of this exercise is to determine a nonarbitrary amount, that needs to be collected on a daily basis, that will result in stress-free coverage for:

• Your home expenses
• Your desired savings
• Your desired debt paydown
• Your practice expenses
• Your desired practice savings
• Your desired number of vacation days

Your home expenses (A)

The first step is to determine, in one month, the total amount you spend in order to keep your home operational. This includes every bill, every debt payment, every credit card transaction, and every cash withdrawal. If you are currently putting money aside automatically from your checking account towards savings of some kind (good for you!), don’t include it here. We’ll cover it later. I recommend compiling the amount spent in the last six months on the following: mortgage/rent, home services, home shopping, groceries, restaurants, alcohol/bars, health-care bills, health/fitness, personal care, clothing, movies, education, babysitters, auto payments, auto fees, auto services, gas, fees and charges, charity donations, gifts, all insurances, and everything else.

Just pop those categories in an Excel spreadsheet, with six columns representing the past six months. Make sure to include random various expenses that you incurred, even though they were the result of happenstance. For example, if you spent $2,000 on your car for new brakes, still include that. Remember, the point of this exercise is to determine a daily collection goal that will provide you with monetary coverage for all expenses, planned or unplanned. Create an average monthly expense by dividing the total expense amount by six.

Your desired savings (B)

As mentioned earlier, you shouldn’t include your automatic payments towards various savings vehicles in your home expenses. The next step is to determine the amount of money that you want to set aside monthly for your future self and your future family. Remember, this is your desired amount, rather than your current amount. These numbers too, should not be arbitrary. They should be determined by working backward. For example, instead of saying, “I want to put aside $500 a month for my children's education,” you should be asking yourself how much money will you need to have when your child turns 18 and goes off to college. The same goes for yourself when you are at the age that you would like to retire. There are plenty of user-friendly savings calculators available online that will help you with this process. Most professionals save in at least three ways: (1) retirement, (2) children's education, and (3) rainy day.

If you currently are set up with a 401 (k) or simple IRA plan through the office — and if the office matches up to 3% of your gross salary — do not include your monthly contributions for retirement in this category. That will be covered as a practice expense. Your children's education and your rainy day savings should be included in this category. Take time to determine the monthly amount that will be taken out of your checking account and applied to these two or three savings vehicles.

Your desired debt reduction (C)

If you haven’t discovered the power of extra principle payments towards your mortgage, I highly recommend you visit a mortgage paydown calculator online.These calculators allow you to determine how much time and how much money will be saved with only the slightest extra monthly payment towards principle. By paying a few hundred dollars a month, you might cut years off your mortgage burden. Imagine eliminating a 30-year mortgage in only 12 years! It is possible. People do it because they planned for it! The same goes for all debts. Take the time during this phase of the exercise to determine if, and how much, you would like to contribute monthly towards accelerating your debt reduction.

Your practice expenses (D)

Determine the operating expenses of your office without counting your salary, your contributions to retirement (through the practice), and the tax burden on the office for paying you as an employee. You would compile this the same way that you compile your home expenses, only here, you would include: team salary, tax burden from team salary, benefits (including your own), dental supplies, lab expenses, rent, maintenance, advertising, office supplies, computer supplies, postage, dues, uniforms, commissions, taxes, debt payment (principle + interest), telephone, insurance, education, travel, professional services, and any other check, credit card, or cash transaction you must make as a practice owner to keep your office running.

As you did for your home expenses, pop these expenses into a spreadsheet for the past six months and create an average monthly practice expense amount.

Your desired practice savings (E)

Based on your own temperament, come up with a suitable amount of extra income that should be generated monthly that will be used exclusively as savings, loan paydown, or as a financial cushion. This amount really should not be considered “profit.” Savings in general is not “profit.” Savings does not represent fun money. Instead, consider your desired savings amount as just another bill that needs to be paid. The person receiving that bill just happens to be your future self, or your future children, at a time when financial circumstances may be different.

Your desired number of vacation days (F)

Take a full-year calendar, and sit down. It is time to plan your perfect year. If you are like many of us, you will take one vacation to see your family. You will take another vacation to see your spouse’s family. You may take still another vacation for a CE course. At the end of the year, you will look back at the year and realize that you really didn’t take any vacations! You just closed the office several times in order to fulfill obligations. In my opinion, the ideal year includes the above three, along with one really great vacation with the whole family, one really great vacation with the spouse and no kids, and one for purely spiritual, fitness, or philanthropic purposes. These are the vacations that many wish they took more of, but don’t because they never planned for them. These extra vacations need not be financially stressful, as your established daily goal will provide for these. Count up the remaining days open and create a daily goal that allows for all your financial obligations to be fulfilled, along with valuable time off.

OK, you’ve done all the thinking. Now it is time to plug all of this into the following equations:

• Add A, B, and C. The sum is the total required net salary that you need to pay yourself.
• Multiply your net salary by 1.5. The product is your required personal gross salary.
• Multiply your required gross salary by 12, giving you your required annual gross salary.
• Add D and E. Then add your desired monthly contributions to a 401 (k) or an IRA account. The sum represents practice expenses outside of your own salary.
• Multiply required gross salary by 0.0765, which represents the practice's tax burden on the office for paying you.
• Multiply required gross salary by 0.03, which represents the company match for your retirement contributions.
• Now add practice expenses outside of your own salary, tax burden for paying you, and company match for retirement account. The sum represents the total amount, monthly, the practice must collect to pay for all of its expenses, but without paying you. We’ll call it monthly practice expenses.
• Multiply monthly practice expenses by 12, and you’ve got your annual practice expenses.

You’re almost there!

• Now add annual practice expenses to annual gross salary. The sum is the total amount that your practice must collect in a year in order to satisfy all of your financial goals. This total amount, although a total pain to determine, is so important, as its discovery will now allow you to create a particular vision for the year, enabling your practice to move in a more confident direction.

• Now, take that calendar — the one with all of those dates crossed out for all those fun and meaningful vacations! Count up the remaining days — the days in which your practice is actually open. Simply divide the sum from the previous paragraph by the number of days that you are open, and you have now determined your daily goal.

It might be more than your current goal, and if so, please do not worry. We, as humans, have a tendency to expand our potential in order to satisfy our goals. Now that you realize what needs to be done in to satisfy your financial stresses and take appropriate and meaningful time off, you will undoubtedly create the systems that will allow your office to make and exceed that daily goal consistently. Good luck in your journey!