Cut costs without cutting growth potential
Out-of-control expenses reduce your income and can even delay your retirement, but a certain amount of judicious spending will actually stimulate growth. Investing in internal marketing, which can be very cost-effective, or in customer service upgrades can pay off in the form of more and happier patients. Also, variable expenses will rise and fall with the volume of dentistry you perform. So, while you should eliminate inefficiencies and waste in all expenditures, overzealous cuts could hurt more than they help.
Trim waste wherever you find it. In general practices that have not conducted a thorough analysis of expenses recently, there will be budgetary fat to trim. Even variable expenses may be inflated. Review all expenditures as a team, with the goal of reducing overhead to 59%.
Don't limit growth potential. Spending that can lead to higher production and profitability -- generating referrals, training, and technology needed for offering new services, etc. -- should be included in your budget. Just be sure to measure the return on investment.
Roger P. Levin, DDS, is the chairman and CEO of practice management consulting firm Levin Group. You can connect with Levin Group on Facebook and Twitter (@Levin_Group) to learn more strategies and share ideas. Also, check out Dr. Levin's free practice management videos at www.levingroup.com/gp.
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