Being a great dentist might help you run a successful practice, but in order to turn it into a lucrative and profitable business, you need to be a competent business owner too. And while an experienced accountant will greatly help with money management, there are some decisions that only you can make to get the money rolling in the right direction. I am talking about the often ignored cash flow.

Now a lot of dentists would be like, ‘those nitty gritty details I let my accountant handle,’ while others would be like, ‘yeah thanks Jesse, but I got my business cash flow covered.’ Whichever of these statements holds true for you, I am quite certain there are details down here that you would have overlooked. Let me summarize this article for you in one simple sentence so that you get a better idea of the what’s, why’s and how’s of our today’s topic- “CASH FLOW IS ARGUABLY THE MOST IMPORTANT ASPECT OF YOUR BUSINESS’S GROWTH.’

Okay, that might be a bit dramatic, but I just had to get it out there. Because it baffles and saddens me when I see dentists running their practices and even other business owners with professional business degrees overlooking the importance of cash flow. Now that I have the gravity of today’s topic covered let’s jump right into what cash flow is, how you should integrate or more aptly calculate it, and most importantly, how to maximize it for greater monetary returns.

What is Cash flow?

We really need to understand our business from a numbers perspective. And while many business owners boast about their ability to use their intuition and gut for making important money decisions for their business, it would really help if they could get into the hard numbers and have definite answers about the cash at hand. Because one thing is for sure- businesses don’t go crashing down because they are out of revenue, but because they run out of cash.

So what is cash flow? Cash flow comes from the use of assets in your business. Let’s break down these assets in dentistry. The physical assets would be the chairs, the hand pieces, the infrastructure, compressors and the likes. Your database assets would be your goodwill, or your patient base. Your HR assets would be your team and the number of staff that you have. You will also have the intellectual property assets like the systems, the processes, the structures and how things move in that direction.

Now as business owners, the objective is to turn those assets into generating sales; and then profit from those sales. And while the profit numbers might give you an idea of what’s going on in the business, it seldom indicates much about the viability, if it doesn’t address cash flow. So in the simplest of terms, cash flow is the cash a business has at hands to keep the business operational and profitable.

The idea is to convert profit into operating cash and then free cash flow. If you are the owner of your business, then you can distribute that free cash flow to you, as a dividend. Alternatively, you can use that free cash flow to reduce debt levels by paying down debt. You can also invest some of that cash flow in purchasing more assets.

A business’s efficiency is measured by its efficiency of converting assets to cash flow. So what you, as a business owner, need to remember is that a business’s efficiency relates to conversion of assets to cash flow.

The Five Levers of Cash flow

Now that you have a good understanding of what cash flow really is and how important it is for you to keep track of it, let’s delve into methods and strategies that will help you master and maximize it. There are five main components or levers for enhancing cash flow. I discuss them in detail here:

Generating Revenue

Arguably the most important lever is the ability to generate revenue. There are three sub levers for generating revenue; and for running a dental practice, they can be explained as follows:

Seeing More Patients

The most important of these is seeing more patients. This is interrelated with marketing, capacity, efficiency of scheduling and many other factors. But the bottom line is to maximize the number of patients walking in that door.

Frequency of Visits

Now this one might seem a little tricky. How do you ask your patients to see a dentist more often? The most ethical way to do that is by making sure your recall system is tight and you ensure complete treatment follow up.

Increase the Average Transaction Size

This, in common business language is called an upsell.  You can increase the average transaction size by diagnosing correctly, by offering a full scope of services so that you don’t have to refer them elsewhere, billing appropriately and by avoiding unnecessary discounts.

Do remember that there is a very fine line between doing great business and doing it unethically and immorally. So do ensure that you don’t cross that line.

Do remember that there is a very fine line between doing great business and doing it unethically and immorally. So do ensure that you don’t cross that line. Offer your client the highest standard of services and consultation just like you’d offer it to your own mom or kid, and you’d never have to worry about crossing that line.

Minimize Your Expenditure

It is fundamentally important to minimize your expenditure. Now you are probably thinking, ‘but I only spend on inventory and costs that are absolutely necessary. I am sure you do. But what if I told you I can point out at least a few expenditures that can be avoided or cut down? How much do you generally spend on consumables? 10%, 8% or if you are really cutting down, then 6%? What if I told you we run at about 3.5% and still operate a thriving successful practice? A baseline should be no more than 7%. Run your eye over your expenses from time to time to see if you are getting a return on the investments that you are making. Just set a budget and let your team know that they have to manage within that budget.

One great tactic to ensuring you cut down on expenses is by opting for singularity. So for instance, avoid using three different composites, several different impression materials or four different bonding materials. Having a single method or system will ensure less upkeep and/or training cost.  

Reduce Account Receivable Days

The last three levers are tied together as all three of them boil down to the balance sheet. The first one of these is reducing accounts receivable days. For many practices, this may not be an issue as they collect money on the day of the treatment. But there are some businesses that are running accounts or have got bad debts or extended payment terms because they aren’t getting money in fast enough. Having your money out can greatly impact your cash flow so you need to make sure that the receivables days are reduced to the minimum possible.

Reduce Inventory Days

Let’s take an example here. You are getting implants for a great discounted price if you buy in bulk. You jump on the opportunity and get loads of them, more than your practice uses in a given time frame. You are thinking, ‘at least I got cash sitting right there on my inventory shelf’ and I am thinking, ‘yes, but that cash could have been utilized for more important investments rather than just sitting there doing nothing.’ The point I am making is, you need to minimize your inventory days. We want to turn our stock over; we want to turn our consumables over. Making sure you’re getting quick turnaround in your lab jobs is another version of your inventory days. I see a lot of dental practices with unnecessarily huge inventories that are covered in cobwebs and products that expired long before they can even remember. That’s just wasted cash in my opinion.

Increase Payable Days

This is another tricky one; because it can get difficult to increase payable days ethically, morally and without breaching the said agreement. It is very important to have good relationships with your suppliers. But if the agreement states you should pay by the end of the month, then pay by the end of the month; take advantage of your payment terms to maximize cash flow.

Points to Ponder

So just to quickly sum it up. In order to maximize cash flow, you need to increase the revenue of the business, reduce your expenses, and get money in as quickly as possible and out as slowly yet ethically as possible.

P.S. Whenever you’re ready …. here are 4 ways I can help you grow your dental practice:

1. Grab a free chapter from my book “Retention – How to Plug the #1 Profit Leak in Your Dental Practice”

The book is the definitive guide to patient retention and how to use internal marketing to grow your practice – Click Here

2. Join the Savvy Dentist community and connect with dentists who are scaling their practice too

It’s our Facebook group where clever dentists learn to become commercially smart so that they have more patients, more profit and less stress. – Click Here

3. Attend a Practice Max Intensive live event

Our 2 day immersive events provide access to the latest entrepreneurial thinking and actionable strategies to drive your practice forward. You’ll leave with a game plan to take your results to the next level. If you’d like to join us, just send me a message with the word “Event and I’ll get you all the details!  – Click here

4. Work with me and my team privately

If you’d like to work directly with me and my team to take your profit from 6 figures to 7 figures …. just send me a message with the word “Private”… tell me a little about your practice and what you would like to work on together, and I’ll get you all the details! – Click here

This week I want to talk about something that will help us be more effective in our roles within and beyond our practice. In some way we all strive towards self-improvement every day. But it can be a struggle. It takes continuous discipline and focus.

It’s certainly not easy but it is definitely, doable. Here are a few little tricks to help us along our way.

Elite athlete, Dental coach, and past practice owner Dr. Jeffrey Tho brings his unique insights on how he has succeeded in literally every challenge he had taken on.

Dr Tho’s insights deliver seven easy ways to facilitate that feeling of outdoing yourself on a personal and business level.

1.Invest in training

Investing in training is one of the best ways to help you succeed as an individual. To succeed in training, make learning your goal. Goals are an excellent way to encourage behaviors in other people and in ourselves.

The training process may be tedious, you will be doing a lot of things over and over, but it is this consistency that will lift your skills and make you a better performer.

‘When you’re doing training, you need to make sure that you’re not just learning it as a theory, you need to know how you’re going to implement it in your business, or your sport, and on that crucial match day.’

Dr. Tho insists on what he calls perfect practice. ‘The way that we train has to be the way that we will perform, and it has to be as realistic as possible.’

2. Focus on the next step

Once you are trained, or training hard, then what’s next? You must know your next step.

Identify and focus on the next step. Implement what you’ve learned in the ‘classroom.’ Come up with a strategy to help you move forward. Your ultimate goal shouldn’t be winning. No!  Focus on the actual process first, because you’re not yet at the winning point.

The little steps you make along the way are what will lead you to the winning point. Dr. Tho explains that ‘Focusing on the process, is like the steps that are going to lead you to your end goal.’

Without focus on what comes next you may miss those smaller steps along the journey where you can do a personal best and outshinine yourself at a personal and practice level.  Small wins along the way can be significant to maintaining discipline, motivation and focus. Don’t discount the power of these!

3. Practice the art of visualization

Visualization is all about imagining yourself reaching your ideal result. Visualize yourself quitting things that are not part of your vision and building in to your routines the actions that matter to your goal.

Take the time out of your routines to sit quietly and think about your win. What does it look like and when does it happen?. Get a clear vision of what it will feel like for you. This will spark your motivation to work towards succeeding in whatever you do.

The act of visualization will help you gain confidence, ignite creativity, overcome your fears and increase your focus. Dr. Jeffrey Tho explains that ‘Visualisation is huge, and it can help you prepare as well. If you’re nervous about something, the more you visualize it, the more familiar you are with it, the better you’re going to be prepared, and you’ll be sure to execute it a lot better.’

4. Become an effective planner

Planning is an efficient way to help you attain the maximum results. Plan your time, it shall help you strike a balance between all activities you need to do and focus energy where it is needed most.

The best way to plan your time is by having a purpose and a goal. Effective planning will help you optimize your time.

“When it comes to balancing all the things you need to do, you have to have a definitely clear priority about what’s important at that time and devote 100% to that task in that moment, because you can’t do anything else, other than worry about other things.”

5. Be decisive

Decisive individuals make decisions and move these decisions forward by taking action.

Those who succeed in life will often report being able to make decisions fairly quickly and then back their own decisions by investing focus and energy behind them to get results.

If you struggle with decision making then you should try to make decisions based on the your beliefs and your priorities.  Once a decision is made, out a focus on it.

Dr. Tho explains that focusing on the decision you make helps it work.

It comes down to that old saying…. You just have to back yourself!

6. Overcome your fears

Of course we all know that no human being is born with fear in them?

Fear is an emotion that undermines your ability to take action. It puts the brakes on.  It can hold you back from attaining your goals.

But how exactly do you overcome your fears?

You can start by visualizing yourself as a fearless person. Do not deny that you have a problem resulted by fear. Face the problem head on.

Picture yourself performing in confidence in the area you want to pursue. Visualise yourself blitzing that fear.

You know, feel the fear and do it anyway!

Dr. Jeffrey Tho suggests having a personal trigger to help you overcome fear. This trigger will get you thinking positive thoughts when fear appears and help you step into what you need to do.

This may involve bringing up a picture of a favourite place that gives you instant mental strength. It may be a beach scene or a mental picture of you doing something you love or achieving a goal.

Bringing this front of mind when you feel fear lurking within will help push the fear out and help you refocus on what you need to do.

7. Have a support system

Create a network of support from the people around you. Choose people in your line of work or study. This helps you have individuals you can look up to in your time of need. They present you with a different perspective on how to handle things and even influence your decision making process.

The support they give you helps you feel less anxious which in turn helps you to overcome your fears. They can help spike your motivation as you all are going through the same experiences.

Don’t miss this week’s podcast with Dr. Jeffrey Tho. He also explains the importance of developing a social support system by sharing his personal experiences at the Australian Institute of Sport. His insights are invaluable!  He reminds us that “We all have that unexpected reserve of strength inside that emerges when life puts us to a test”.

P.S. Whenever you’re ready …. here are 4 ways I can help you grow your dental practice:

1. Grab a free chapter from my book “Retention – How to Plug the #1 Profit Leak in Your Dental Practice”

The book is the definitive guide to patient retention and how to use internal marketing to grow your practice – Click Here

2. Join the Savvy Dentist community and connect with dentists who are scaling their practice too

It’s our Facebook group where clever dentists learn to become commercially smart so that they have more patients, more profit and less stress. – Click Here

3. Attend a Practice Max Intensive live event

Our 2 day immersive events provide access to the latest entrepreneurial thinking and actionable strategies to drive your practice forward. You’ll leave with a game plan to take your results to the next level. If you’d like to join us, just send me a message with the word “Event and I’ll get you all the details!  – Click here

4. Work with me and my team privately

If you’d like to work directly with me and my team to take your profit from 6 figures to 7 figures …. just send me a message with the word “Private”… tell me a little about your practice and what you would like to work on together, and I’ll get you all the details! – Click here

Scaling success is a constantly evolving journey.  Whilst our scaling goal may be clear in our own minds we have to remember where scaling leverage really comes from.  That is our systems and our teams.

When truly aligned these two critical aspects of our practice work to ensure the patient experience is delivered by your team as if you were in the practice delivering it yourself.

That is true scaling. Knowing and trusting that your team will deliver excellence and look after your business and your patients the way you would.

The trick to scaling is to invest time and energy in the activities that will project you along your scaling path towards your end goal.

In this blog I am sharing with you the scaling lessons, and strategies of one of my elite clients.

Dr Jahnavi Vora knows what true scaling looks and feels like. Along side husband Dr Jay Shah the couple have built two tremendous businesses over the past 10 years.  But during the past 4 years in particular they have successfully managed to scale up to a multi-practice enterprise in Albury – Wodonga on New South Wales/Victorian boarder.  

Scaling has given them the life they dreamed of.

Dr Vora believes real scaling is achieved when you focus on 6 key strategies. The couple began their scaling journey in order to achieve real work – life balance for their young family. “Growing up in India our parents worked 9am to 9pm, and we didn’t have much time with them, especially with our Dad” said Dr Vora. “We wanted to create a life where we had more time with our children. So scaling our dental practice was the best option for us to achieve that goal. Practice ownership is a dream come true”.

Strategy 1: Identify clearly your vision and values.

It is important to know what you want to achieve through scaling and why.

Do the critical thinking. Understand why you want to scale your practice and what a scaled business and a scaled life will look like for you. You need the end goal in mind. For some it is a multi – practice business for others it is one thriving practice run by a team of others.

Ask yourself this question; What is motivating you to want to scale your business?  

Dr Vora explained that vision and values work hand in hand. “Vision and values have become the bedrock of what we teach our team. The values on which the team are trained manifest in the behaviour’s we see from them within the practice, and what patients see and experience, so values are really important when scaling”.

• Take the time to create a meaningful vision and set of values.
• Train your team to your vision and values. And remind them at every opportunity.
• Use vision and values to educate your team on their own purpose and the practice purpose.
• Remind yourself of your vision when any self doubt or obstacles present themselves.

Strategy 2: Nurture culture.

To create a truly stronger, more profitable business, you need to invest time and energy into what makes it strong and profitable…people and culture.

“You want people who will work for you the way you would” said Dr Vora. “We hire people based on their attitudes and personal values and train them on the skills their role will demand of them”.

You will often hear me talk about the importance of culture. When you are all in alignment with culture this creates synergy, creates speed, creates ease and creates flow.  

“We spend a lot of time nurturing our team culture and I truly believe this is felt by patients. If they see team members with positive professional behaviors – team members that are calm, well organized, happy, respectful and kind with each other then they as patients feel easy, and know everything is running smoothly here with this practice. Patients feel I’m in the right place. I’m in safe hands” said Dr Vora.

Strategy 3: Invest time in your Team.

Many practice owners undervalue the significance of spending time educating, developing, meeting and just chatting with their teams. But it is the team who deliver the scaling plan day in day out.

Dr Vora sees this as a key factor in scaling.  “We could say the time we spend with our team we could spend with patients. But the time with team is paid back to us many times over. We talk about what the patient may feel, see and experience. The time we spend with team is definitely an important part of our success in scaling” she said.

Strategy 4: Use what you already have.

This applies to many facets of practice scaling. It may relate to putting to best use the individual talents of team members such as someone’s great people skills or another person’s attention to detail, writing SOP’s or creating great patient birthday messages.  

It may relate to making the most of the unique location of your practice.  

But in particular, over a number of years now you have heard me talk about using what patients you already have.

It is the retention piece.

Dr Vora explained that using what they already had was and still is an important aspect of their scaling achievements.

Much of their early scaling success came from their existing patient base. New patients were coming in, but the existing database was under – utilized as it is in many practices. A focus was placed on nurturing existing patients.

This meant systems such as recall and reactivation had to be implemented.

“We started reaching out and getting patients back in. We developed new habits around booking patients before they left after an appointment”.

“Our systems became much more important to us in all these patient related aspects of our practices” said Dr Vora

Strategy 5: Develop strong systems.

Strong well structured, well defined systems and the knowledge team members have of them, and their dedication to them, is critical in any practice looking to scale.

Dr Vora believes systems need to underpin the actions and behavior’s necessary for scaling to succeed in a practice. Reflecting on the belief that to scale you need a team who will work the way you would yourself, many systems need to be written with the vision and values in mind.

Strategy 6: Invest in Yourself.

Dr Vora believes it is also important to have other identities and develop your own interests and passions outside of the common day to day roles we play.

“It’s great to be a Mum or Dad, Dentist, Practice Owner, but it is important to have time away from these things to develop other passions and interests that you desire”. She explained.

Dr Vora has a love of cooking and recently expanded this into making cooking videos where she cooks and shares recipes. Knowing that she was always struggling with what to put in to her children’s lunch box she decided other Mum’s must be struggling with this too. So, she has created a series of videos which are promoted to practice patients and the general community.

“I was blown away. The response from the community has been fantastic” She said. “Lot’s of people have been talking about the dentist who has cooking videos. It has been a way for me to take an interest that I am passionate about but not related to dentistry and use it to introduce me and the business to broader parts of the community”. She explained.

Dr Vora’s final words of wisdom…“Do something that gives you inner happiness”.

Great advice I think. And I am sure you do too!

Final Words…

Get hold of my Savvy Dentist App. Now you can access all of our content including our blogs and podcast episodes quickly and easily. We will also be adding new features in the next few months so stay tuned. You can download the Savvy Dentist app from your favourite app store including the Apple App Store and Google Play.

Please also consider joining us at the Savvy Dentist Facebook group. We’ve got tips, tools, and trainings waiting there for you. Head over to the Savvy Dentist Facebook Group.