DMD Staff

Kerry Straine, CPBA, is the CEO and President of Straine Consulting. In this video clip, he reviews the common cash flow mistakes he sees dentists making today. They include not having a formal budget in place for the year ahead, and not having a clear understanding of how much dentists will take from the practice in terms of profit. Straine provides effective approaches to resolve these issues.

Interview Transcript (slightly modified for readability)

“The most common cash flow mistake I see dentists making, and there’s many: Number one is not having a formal budget for the year ahead so that they can see that their business is going to perform according to the economic needs of the practice and the owner. Number two, not having a clear understanding of how much money they’re going to take from the practice in the form of profits, distributing to themselves for lifestyle, retirement, disability, long-term care, debt reduction, working-capital reserves, and don’t forget the taxes.

WATCH: Setting an Economic Vision for your Dental Practice

We really don’t have an understanding, and too often people don’t think that the amount of excess cash flow they have that month is all there is to spend. And when we’re helping a sole practitioner, who, let’s just say has a revenue budget and collection budget of a million five, profitability is going to be around 600-700 thousand dollars before debt service, and taxes, and lifestyle. I encourage that owner to make sure they don’t take more than 20 percent of that amount for them to spend personally, because in many states, half of it is going to go to taxes — federal and state level. And the balance is going to go to working-capital reserves, paying off debt, don’t forget retirement, with the rates of return we’re earning personally on investment accounts, when we do retire, we’re not just going to get a return on investment. That will be a little amount. We’re going to be taking a return of our investment to fund our lifestyle in retirement.

So the first mistake is, number one, not having an accurate plan. Number two is not having adequate working-capital reserves. I read a book once called Business at the Speed of Thought by Bill Gates, one of the richest men on the planet, you never know based on valuations, but, he said when he took Microsoft public he put two years’ worth of employee wages in a bank account and he figured if they could just start making money and be profitable in two years he knew he had a satisfactory economic equation that he could build from. I thought about that, and having prepared a lot of financial statements and tax returns in my life early on before my dental consulting role, I thought, what does a small-business owner need to have in terms of working capital set aside in savings?

My opinion is that they need to take whatever their monthly payroll is for all the team members and themselves. For a sole practitioner producing a hundred-thousand a month, that could be 45, 50 thousand, times two, and that’s how much money they need to have in savings and they should never touch it. That’s your working-capital reserve — your rainy-day fund, my dad used to call it. And on top of that, whatever your normal distributions are per month out of your checking and payroll account, you need to have half of that in there as a minimum at all times. Otherwise, what’s going to keep that owner awake at night is going to be the cash flow constraints that they’re facing. And there’s just no ATM to fund this type of overhead.

Too often, what the big financial mistake that business owners make is that they’re under capitalized, and nobody helps them understand that. As consultants, how can we come up with a strategy for that doctor to consider if we don’t know the economic consequences. As Steve Covey said, in his Seven Habits of Highly Effective people book, one of them is, you better begin with the end in mind. We need to know what our balance sheet needs to look like — all of those assets we need to buy, and how are we financing them, with the bank’s money, or with our money? Because that’s how assets are acquired. And within that pool, in our current assets, what do we have in terms of liquid reserves available to help us through those down times instead of borrowing against our future with a line of credit credit cards. If we can overcome those two big mistakes, the future is safer in the months and years ahead.”

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Kerry Straine, CPBA, is the CEO and President of Straine Consulting. In this video clip, he reviews the common cash flow mistakes he sees dentists making today. They include not having a formal budget in place for the year ahead, and not having a clear understanding of how much dentists will take from the practice in terms of profit. Straine provides effective approaches to resolve these issues.


The Common Cash Flow Mistakes Dentists Make

You're Ready to Buy Dental Practice Real Estate. Now What?

Maybe you’re a dentist who has finally decided to go into private practice. In terms of where you want your practice to be located, you’ve settled on a city or town, but not the property. According to Brandy Keck, a Brockerage Liaison at Carr Healthcare Realty, now is the right time to get a practice real estate broker involved. Do not go it alone when faced with the stresses of negotiating a lease or purchase.

“The tips that we give dentists when they’re negotiating on a property are, first and foremost, make sure you hire representation. Do not talk to the landlord, or the seller directly. The dentist is going to want to bring in an expert to handle the commercial real estate transaction for them, and they need to make sure that they come from a place of posture and education. What they need to do is be looking at multiple properties in a market and having a very educated stance on what the market has to offer and what landlords are willing to do for dentists, who are blue-chip tenants coming into the space.

Something that can be challenging for dentists can be the confrontational piece of what it’s like to work with a landlord or a seller directly. Often times, especially if it’s in a renewal situation, they feel like they’re somewhat comfortable or know their landlord when really it’s a brand-new transaction. Dentists are really great about bringing in their team, their contractor, the dental-specific CPA, their attorney. You name it, they have those pieces. They should also have a real estate expert to come in and handle their real estate transaction because there’s a lot of confrontation in it and there’s a lot of looking at a specific property. There really needs to be a posture and an education on multiple properties at one time, and separating themselves a little bit from the transaction.”

Maybe you're a dentist who has finally decided to go into private practice. In terms of where you want your practice to be located, you've settled on a city or town, but not the property. According to Brandy Keck, a Brockerage Liaison at Carr Healthcare Realty, now is the right time to get a practice real estate broker involved. Do not go it alone when faced with the stresses of negotiating a lease or purchase.

im Sawyer, president of Crystal Clear Digital Marketing, discusses strategies for email and social media that produce results.

Marketing Strategies That Make Dental Practices Thrive

Time and time again, social media and email marketing have proven to be effective ways of bringing in new dental patients and staying connected with your existing patient base. In this video interview, Tim Sawyer, president of 

, discusses strategies for email and social media that produce results. The key, he explains, is targeting your message on both platforms to the precise audience you’re trying to attract.

“What are some of the effective ways to use social media and email marketing to grow a dental practice? First of all, any practice that ignores that as an effective marketing medium is making a big mistake, and there’s a lot of data to support that. I think it’s irrefutable that the modern medical consumer is on social media, whether they’re 12 or 75, and probably all of them have two, three or four accounts.

How To Bring In New Dental Patients From The Internet

The key to effectiveness, whether it be email or social media marketing, is to understand who it is that you’re marketing to, because not all patients are the same. You’ve got some attributes that need to be taken into account. Age. You’ve to go take into account what type of treatments and procedures have you performed for this person. And you need to know what treatments and procedures you offer that are complimentary to that. Then through education and awareness, you want to use (email and social media marketing) on two fronts.

One: to attract a higher quantity and quality of patient to the practice. That’s on the find side. Then, on the keep side, you want to use it as a medium to introduce new treatments and procedures, increase connectivity with patients, and also as a referral mechanism.

I would add, one important piece to that, in addition to social media and email marketing, is the importance of making sure you integrate reviews into that strategy. There are two things that influence the modern medical consumer in dentistry. If it’s cosmetic dentistry, certainly before-and-after galleries. But sadly, in many cases, above and beyond the resume or CV of the practitioner, it’s going to be reviews. My wife is 46 years old. She’s not going to buy anything — go to a restaurant, nothing – without going and looking at reviews. Incorporate reviews and before-and-after galleries into a consistent strategy for email marketing and remember that not all patients are the same, and that they’re not all going to respond to the same message.

The last point that I would make for people to really consider, there seems to be this desire in utilizing email marketing to put either multiple offerings or concepts in a single email. The more concepts or promotions that you introduce in a single email, the less effective and the more watered down that message becomes. Think about the singular concept. If you’re going to send if a marketing message to someone — whether it be text, email or even via social media – make sure that you limit what it is you’re trying to say. Be concise. And again, it’s always consistency and frequency.”

Time and time again, social media and email marketing have proven to be effective ways of bringing in new dental patients and staying connected with your existing patient base. In this video interview, Tim Sawyer, president of Crystal Clear Digital Marketing, discusses strategies for email and social media that produce results. The key, he explains, is targeting your message on both platforms to the precise audience you're trying to attract.

Brandy Keck is a Brockerage Liaison at Carr Healthcare Realty. In this clip, Keck discusses what market factors a dentist needs to understand before purchasing practice real estate. Often, Keck says, her company will recommend that dentists work with a demographics firm to understand the demand for dentistry in their respective markets. Other important factors include proximity to other types of dentists, as well as population-to-dentists ratio.

“As far as where dentists are going right now, a lot of the dentist we work with choose to work with a demographics firm to really understand the market. Depending on their specialty and the demographics company that you’re using, it may be somewhere of a population between 1,400 to 2,000 people per general dentist in a given area. When they’re looking at those numbers, they really try to figure out where is there a hole and a need for dentistry right now.

WATCH: Market Factors for Buying a Dental Practice

The other thing they have to consider is a growing market. If there’s a market that’s booming right now and a lot population is moving into an area, there’s going to be a need for dentists coming up. We want them to usually have some level of a consultant or a demographics firm that they’re working with — someone that can drive those numbers. And again, it’s a little bit different when you’re talking about an orthodontist versus an endo, versus a general dentist of what those population numbers per dentist look like. But they try to make those numbers work and they try to make it fit within what a given area can handle in terms of number of dentists.

The trend of dentists versus physicians: Our firm, Carr Healthcare Realty, we also work with physicians, physical therapists, veterinarians. I’d say the main difference is, in the private practice space for physicians, they moved away from private practice the last few years and a lot of the hospitals have started to gobble those private practices up.  We’ve seen a trend where they’re starting to come out of those scenarios now and it’s starting to go more back to a private practice type setting.

It makes a lot of sense for two physicians to be in close proximity to one another if they can refer patients back and forth.  You may see a physician group exist much closer together than you would see two dentists.

In Carr’s world, we really get to know the market as much as we can, especially in the dental world. We want to know where all the dentists are and what the trends are. There are times when we will have an ortho come to us and say, listen, we really want to be located near a general dentist. It may make sense for those two practices to be side-by-side because they can refer patients back and forth. So you see that. There’s just far less dentists than there are physicians, so the number of times that that’s happening happens a little bit more on the medical side than it does in the dental world. But we try that as much as we can. If there are two specialists, or a general and a specialist that would make sense to have in the same area, we’re directing the clients, saying hey, take a look at this property. This may be a good feeder system back and forth.”

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Know Your Dental Market Before Buying Practice Real Estate

, discusses how dentists should offer a generous benefits package to retain talent in their practices. Fine explains that though there may be some sticker shock in the beginning about providing a 401-K or other attractive offerings to staff members, these benefits will keep morale high and keep the competition out. They will also save you the trouble of having to replace and retrain employees, which can cost you time and money.

“How would a dentist make available a very robust benefits package without being concerned about breaking the bank? Dentists want to be able to compete in the marketplace for talent. What we try to do is sit down with our dentist, look over what they have in place and see what we can maybe stretch a little bit on the benefits side to keep employees happy, to keep morale strong and to keep competition out.

Putting Your Financial Priorities in the Right Order

How Dentists Should Set Attainable Financial Goals

The smaller firms might not be doing a 401-K. If you have one, it may not cost you that much, and yet you’ll have something that most of the other small practices don’t have that’s going to give you a leg up for receptionists, for hygienists, for people that are going to be full-time employees. You look at the cost, weighing that against the benefits that you’re providing and the ability to have good people stay.

That’s very important. Turnover will kill you. Just the amount of time, effort and energy to rehire for certain positions, maybe that extra cost of some strong benefits is the answer and motivator to keep them there. Some practices don’t have even the bare essentials of a life, disability or dental plan where if we look at what a small group benefits plan would cost, they’d be surprised at how little of an outlay to provide additional benefits and services to keep their people really excited to be a part of the organization.”

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Randy Fine, LUTCF, present of Robert Fine Associates, discusses how dentists should offer a generous benefits package to retain talent in their practices. Fine explains that though there may be some sticker shock in the beginning about providing a 401-K or other attractive offerings to staff members, these benefits will keep morale high and keep the competition out. It will also save you the trouble of having to replace and retrain employees, which can cost you time and money.

Creating a Strong Benefits Package for Your Dental Practice

Mayer Levitt, DMD, is president of the dental consulting firm, 

. Here he discusses how he has seen Facebook usage translate to an influx of new patients for dentists.

“What makes a practice stand out on social media? I’m not really a social media maven. I do an awful lot with I do a lot to help dentists position themselves well with their websites, and creating a terrific mobile website because more searches are being done on a mobile device than just about any place else.

WATCH: How To Bring In New Dental Patients From the Internet

Make Meaningful Use of Social Media for Your Dental Practice

Q&A: How to Make Your Practice’s Social Media Efforts Pay Off

I’m more and more impressed with the power of Facebook. I used to not see a correlation between an active Facebook page and getting more new patients. I couldn’t quite get what that connection was. All of a sudden, in the last couple of years, I’ve seen a connection in the following way: that if in fact you have a very active Facebook page, meaning that posts are being done there on a daily basis, or certainly every other day, and the dentist is writing blog posts about particular items, say, esthetic dentistry or teeth whitening, or, adult orthodontics, and that is combined with Facebook ads, which are ads that people aren’t necessarily searching for.

They’re subliminal ads. When you’re on your feed and you’re looking, all of a sudden on the right-hand side, it’s amazing that Facebook has been able to locate people who would be interested in that product. Because Facebook has acquired all of its information on your income, and your interests, and where you live, and what your jobs are. I’m beginning to see a stronger correlation with Facebook ads, active Facebook pages, and number of new patients coming in from Facebook.”

RELATED: Did You Know the First Online Social Network Began in a Dentist’s Office?

Mayer Levitt, DMD, is president of the dental consulting firm, Jodena Consulting. Here he discusses how he has seen Facebook usage translate to an influx of new patients for dentists.

Unlock the Power of Facebook to Bring in New Dental Patients

Blair Drenner, vice president of strategic business development at 

, talks about the importance of elective-pay procedures for profitability in dentistry.

“I think profitability and elective-pay procedures are really interesting. First of all, I see a macro trend of all kinds of doctors getting into elective-pay procedures. So, my first piece of advice is, do elective-pay procedures. Get away from just the historic, traditional procedures. And the second is, back to measurability, it’s important to measure your margin on each procedure and prioritize the highest-margin procedure, and promote that and expose that to the market that it’s applicable to.”

“I think the best way to optimize your lifetime value of patients — of course there’s being a great dentist and providing great services and consults – but I often think of it in terms of how many times that person has engaged with you and keeping them up front and personalized.

Number one is delivering personalized content that’s applicable to them. Meaning, if they’re aging, that you have a care plan that’s specific for their age or gender. The other thing is just making sure that your face comes across as someone friendly to your customer base.

I find, oftentimes, that the way dentists communicate to their most valuable asset, which is their customer base is very bland and generic about procedures rather than a personal touch by them and a consultative care methodology.”

Make Your Dental Equipment Purchases Pay Off (Video)

More videos containing expert dental business advice can be found 

Blair Drenner, vice president of strategic business development at eRelevance Corporation, talks about the importance of elective-pay procedures for profitability in dentistry.

Why Dentists Should Be Doing Elective-Pay Procedures

, discusses how dentists should take a look at their financial priorities, including insurance, estate planning, and investment opportunities, and put them in a specific order.

“The strategy that we want to talk about in this segment is, in what order does a person put certain financial priorities, whether it’s their life and disability insurance, their estate planning, their wills, their trusts, their healthcare proxies, their opportunities to invest, their opportunities to save, different factors that are going to come through their life — maybe business opportunities to invest in real estate or another business. Sometimes, people ask, what do you do first? For some, it’s overwhelming and it’s confusing. 

We have a process that we put together for our clients that’s a financial engineering model that focuses on getting those core protection components in place first to make sure that one bad day doesn’t wipe out everything that you’re trying to create and do. The model ensures that all of your limits on your property and casualty insurance; your life, health, and disability insurance; are maxed out to the areas of maximum protection.

Once maximum protection is in order, which also includes making sure your legal documents, your wills, your trusts, your partnership agreements, are all locked and loaded, now, you can get a little more creative with your finances toward savings. Now, once you’re more comfortable in savings, now we go more into the growth area.

It’s really a combination of understanding the philosophy and the foundations to a good, strong financial plan, and then building upon that.”

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Randy Fine, LUTCF, present of Robert Fine Associates, discusses how dentists should take a look at their financial priorities, including insurance, estate planning, and investment opportunities, and put them in a specific order.

Mayer Levitt, DMD,  Here he discusses what dentists should do to create a practice that's admired by their patients and their peers.

Create A Dental Practice Your Peers Will Admire

. Here he discusses what dentists should do to create a practice that’s admired by their patients and their peers.

“Some factors that would influence other dentists to admire a practice: Certainly, it would be a state-of-the-art facility. You want to be able to have something that when you walk into that facility, people realize that they’re in the right place. It’s almost like you just know it when you walk in. Obviously, it’s got to be clean and it’s got to be impeccable, and it’s got to be very, very much state-of-the-art in terms of the kind of equipment that’s in there and in terms of the kinds of decorations.

RELATED: More Advice from Mayer Levitt, DMD

Tips for Retaining Your Dental Practice’s Staff

I think you’d also need to perceive that the staff that works there, and certainly other peers that come in and see what’s going on, they get the feeling that the staff knows what they’re doing, that it’s a well-oiled machine, and it’s functioning on all cylinders. I think that it has to be seen that this dental practice has a very strong commitment to continuing education, and I think that they would be able to see that the kind of customer service is offered, and the way that people are treated in that practice is really exquisite.

I think you would also be impressed if you were a peer that when you did an internet search, and when you did a Google search, that these people came up near the top, that they’re very prominent. I think that they need to be able to have a prominent position on Facebook. Social media and internet are extraordinarily important and I think that those are the kinds of things that would impress somebody coming to see a practice.”

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Mayer Levitt, DMD, is president of the dental consulting firm, Jodena Consulting. Here he discusses what dentists should do to create a practice that's admired by their patients and their peers.

, discusses how you can use technological solutions to retain dental patients.

“How can dentists use tech to attract and retain more patients? Philosophically, the way that we look at the world in 

 is really in three phases. And every modern dental practice needs to do these three things. The need to find, which is to attract a higher quality and quantity of traffic to their site. They have to convert — sell, serve – those people into patients. And they need to retain them.

How to Bring In New Dental Patients From The Internet

A lot of times, the retention piece gets ignored. What we’ve discovered is … the key to success in retention is connectivity, part of which is social media — establishing a social presence and encouraging those patients to follow you on those mediums. But probably the most effective strategy is two fronts: One is email marketing and the other is texting.

Obviously, the modern dental practice does not have the personnel or the resources to type 100,000 emails a day reminding their patients that they’re doing a great job on multiple fronts. What we recommend is some type of CRM or opportunity-management tool that can actually put a dentist’s patient base into groups. For example, one group would be cosmetic dentistry. One group could be, if it’s an orthodontist, InvisAlign. Or general dentistry, and then have marketing messages associated with each one of those groups.

So, the practice isn’t doing the work, but they’re using technology to stay in touch with them on a regular basis. And they key to success in retention, whether it’s through email marketing, text-based marketing, or social media is consistency and frequency.

A lot of times, what happens is the practitioner will listen to a webinar or go to an event and get all excited about marketing, get the office wound up, and for one month, they’ll go back and they’ll send two emails, and they’ll do some social media posting, and then it kind of loses its steam. The problem with that in digital is when you stop, when you’re not consistent and frequent, you don’t go back to where you left off. You go back to where you started.

There are absolutely great tools on the marketplace, and they are relatively inexpensive. But the key is, you’ve got to commit to it. It’s got to be consistent and frequent, and you have to update your database.”

Tim Sawyer, president of Crystal Clear Digital Marketing, discusses how you can use technological solutions to retain dental patients.

DMD Staff

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