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Budgeting for a Brilliant Business: The Dentist

Effective budgeting requires vigilance, adaptability and a commitment to financial management

Keeping tabs on your business budget is essential when running a busy dental practice. It ensures financial stability and growth while enabling you to provide high-quality dental care to your patients. By implementing effective budgeting strategies, you can streamline your expenses, maximise revenue, and make informed financial decisions.

For starters, you need to set clear financial goals for your practice. These goals could include increasing monthly revenue by attracting new patients, reducing overhead costs, or upgrading equipment, like investing in that intraoral scanner you’ve been eyeing for the past few months. Establishing specific goals will help you develop a realistic budget plan and enable you to track your progress.

A comprehensive budget will outline all of your expected income and expenses. Kick it off by identifying your primary sources of revenue, such as patient fees, insurance reimbursements, or NHS contract. Next, list all your expenses, including rent, utilities, staff salaries, supplies, and marketing costs. By recording all these details in your budget, you can gain a clear understanding of your financial situation.

While juggling a busy practice, you also need to regularly monitor and track your expenses to ensure they align with your budget. This involves keeping detailed records of all financial transactions, including invoices, receipts, and billing statements. By maintaining accurate and up-to-date financial records, you can easily identify any discrepancies or areas where you may be overspending.

Eliminate waste

Budget control isn’t just about tracking expenses, it’s also about eliminating waste. When an expense appears superfluous, you should consider conducting a cost-benefit analysis to determine whether the expenditure delivers commensurate value. For example, if an underused software subscription drains your resources, cancel it. If a Facebook advertising campaign yields minimal engagement, redirect your efforts to more productive marketing channels.

Effectively managing your overhead costs is crucial for maintaining a healthy budget. Look for areas where you can reduce expenses without compromising the quality of patient care. You could potentially negotiate lower prices with your laboratory suppliers and consider more energy-efficient equipment to reduce utility bills.

Indeed, your business energy consumption presents an opportunity for substantial savings – particularly now fixed tariffs are making a comeback – and also the advent of smart meters means you have more control than ever and can identify inefficiencies.

Cost-effective suppliers

Other business services you use such as software, your business mobile or broadband provider should be regularly assessed too. Switching to more cost-effective suppliers can be a game-changer. Staying vigilant in reviewing the market and comparing quotes can help to secure better deals or more favourable tariffs. In many cases, the transition can be effortlessly facilitated by both your old and new providers, minimising your workload and freeing up more valuable time for patients.

You should remember to regularly review your treatment fees to ensure they are competitive. According to Ken Runkle, the American dental business guru, the number one financial habit successful dentists have in common is increasing fees consistently and appropriately. You could consider offering additional services or expanding your patient base to increase revenue and  implementing effective patient retention strategies as well as encouraging referrals to attract more patients.

Practice owners can also utilise technology to streamline their financial processes and budget management. There are various software applications and tools available that can automate tasks, such as accounting, financial analysis, and reporting. These tools can help save time, reduce errors, and gain valuable insights into a dental practice’s financial performance.

Regular reviews

And remember a business budget does not need to be set in stone. Regularly review and adjust your budget to ensure it remains relevant and aligned with your goals. Monitor your financial performance against your projected figures and adjust your budget accordingly. This will allow you to adapt to any changes in the business landscape, identify areas for improvement, and anticipate any potential financial challenges. This becomes even more important in the years prior to a potential practice sale.

If you don’t know where to start with setting budgets, consider reading the Dental Elite Benchmarking Report, or discussing the same with one of our valuers, as it looks at core expenses as a percentage of revenue by practice composition.