If you’re drowning in debt, it’s time to make some changes so your practice can finally meet its full potential. I know the thought of trying to reduce your debt can be overwhelming, especially if we’re talking about hundreds of thousands of dollars in financial obligations. But you don’t have to do it alone. I’m here to help you take your practice back.
To get you started, her are a few tips designed to reduce your debt and put your practice on the path toward success and profitability.
Understand why debt is a problem—Debt comes from a variety of sources, including business credit cards, loans, mortgages, lines of credit, and equipment leases. Some debt comes from the cost of doing business, but more often it’s the result of poor financial management.
Determine why debt is holding your practice back and be willing to admit if the problem stems from inefficient practice systems. Most dentists lock into a pattern of running their 20 practice management systems when they start their career, and then never think to update them. This leads to lackluster results that contribute to debt and keep you from reaching your goals.
Look at cash flow—Once you understand why debt is a problem, it’s time to get a handle on your practice’s financial situation. The best way to do that? Conduct a cash flow assessment.
Here’s how it works. Log the numbers for net production and collections over the last 12 months, the percentage of accounts receivable over the last 90 days, and your total monthly payments on leases, loans, and business credit cards. From there, take a look at average monthly payments for the lab, dental supplies, salaries, taxes and benefits, monthly facilities costs, and miscellaneous expenses.
This will tell you exactly where all your money is going. Not comfortable conducting this assessment? Don’t worry. McKenzie Management offers a complimentary cash flow assessment that provides the guidance you need.
Have an expert look at your practice finances—Now that you have a better handle on your finances, start taking steps to significantly reduce your practice debt. Have your specific financial situation evaluated by an expert and determine the best way to reduce your debt.
Remember that every practice is different; there isn’t a one size fits all fix. You’re a busy dentist and not a financial expert, which is why you should consider hiring outside help. The right expert can help reduce your stress and your debt.
Update your systems—Remember those inefficient systems we talked about? Now is the time to start improving them. Inefficient systems contribute to overhead and debt, which is why it’s so vital to keep them up-to-date. I suggest you look at every system and determine which ones need updates, and then make those updates. Trust me, you’ll be happy you did. Not only will fixing your systems help alleviate your money woes, it will also improve practice efficiencies. This will make your team members happy and more productive, so you can reduce your debt while growing your bottom line.
Now is the time to get your financial obligations under control and to take your practice back. Debt shouldn’t control your every move, but that’s a reality so many dentists like you face. Once you finish writing check after check each month, you likely don’t have much left to invest in your practice, let alone start saving for retirement. I know this isn’t what you envisioned when you became a dentist, and the good news is it doesn’t have to be this way.
Tackling debt might seem like a daunting task, but it’s well worth the effort. Contact McKenzie Management if you’d like more guidance. Together we can reduce your debt while growing practice productivity and your bottom line.