Do’s and don’ts for financial management

As the CEO of your practice, you need to have a clear picture of its financial status and performance. You should also exercise fiscal discipline to ensure that your expenditures are cost-effective and that as much production as possible is converted into income. In other words, you need to create a comprehensive, detailed operating budget … and abide by it.

Review past expenditures to establish a budget for the coming year. The easiest way to create a budget, if you aren’t already using one, is to look at the previous year’s books. Note what you spent category by category, adjust for any known changes (increased payroll, decreased rent, etc.), and total it. Project revenues for the coming year (e.g., 15% greater than the previous year). The difference between these two numbers is your net practice income. If you don’t like what you see, figure out how to spend less or earn more. This is one of the main advantages of having a budget.

Don’t make it easy to go over budget. It may be easy to convince yourself that some new, gee-whiz technology will pay off for your practice or that the production shortfall in the first quarter will somehow correct itself later in the year. The new dental economy is less forgiving than the old one. Control overhead. Come up with more effective marketing strategies. Respect your budget. It’s essential to practice success.

Dr. Roger P. Levin is CEO of Levin Group, a leading practice management and marketing consulting firm. To contact him or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit LevinGroup.com or email [email protected].

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.