Do's and don'ts for financial management: Where does the money go?

The Levin Group target for general practice overhead is 59%. According to our recent analysis of data from the U.S. Bureau of Labor Statistics, most practices are at 75%. That's a huge difference. Think of it this way: For every $100,000 in production generated, 16% in overhead equates to $16,000. For a practice generating $500,000 in production, that would be $80,000 in additional overhead. Reducing high overhead by even percentage points can yield significant savings to the practice.

Create a budget and stick to it. Many practices either operate without a formal budget or just cut-and-paste last year's budget, which may be a copy of a copy of copy. Dentists need to know how much they spend every month on rent, loans, salaries, equipment, utilities, supplies, and incidentals. By creating a budget, you can target specific areas for savings and investment. By following it, you can put your practice on better financial footing.

Don't overlook inventory control. Over time, offices accumulate excess supplies. Twice a year, practices should take inventory of all closets and storage areas. You'll find products you didn't know you had and you'll also free up additional space by getting rid of expired or discontinued items.

Roger P. Levin, DDS, is the founder and CEO of Levin Group, the leading dental practice consulting firm in North America. For the complete list of dates and locations where you can attend his latest seminar, visit www.levingroup.com/gpseminars.

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