I recently read this article about the costs of running a dental practice. Including owner’s pay in the computation of cost for a dental practice or orthodontic practice is not unique to those practices. This is the case for any small business. As we proceed into the financial statements portion of financial accounting week(s), we must begin with the main fundamental truth of running your orthodontic business or dental business: you, as the owner, are almost always the last one to get paid.
Without paying everyone before you pay yourself, you have no business to operate. Let’s look at this in more detail. If you don’t pay your rent, you don’t have an office in which to work. If you don’t pay employees the correct amount and on time, you’ll either have no one to assist with the operation of the practice or a very disgruntled group of staff people. If you don’t pay the utility bill, you have no lights. And I shudder to think what would happen if you didn’t keep your internet service up and running. Loans need to be paid too or your credit is shot and things get repossessed. And so on down the line. All of those things have to be cleared out before you can get paid.
So why is this concept important? Well, it goes to the heart of the fact that while you want to provide the best treatment possible, you need to spend time focusing on the orthodontic business or dental business side of the practice. If the amount left over after paying everyone else is sufficient, you can enjoy income from the practice and enjoy a lifestyle that reflects the hard work that you put into the practice. If you ignore your orthodontic business, you could be working for nothing – literally.
A strong business and top-quality treatment practice are not mutually exclusive concepts. In fact, the two can and should complement each other. A high quality of treatment can lead to better financial results and vice versa. And you certainly do not need to sacrifice a major part of your life or your time to be able to run a successful business.
In the set of posts coming next week, we’ll talk about preparing your financial statements, reading them, analyzing them and taking action to cure any ills that might show up. Most significantly, we’ll discuss growing that bottom line within the context of building a strong, reputable practice. Good times ahead? Yeah, good times ahead.
If there’s anything specifically related to financial statements or accounting that you want us to discuss, please do not hesitate to contact us. We’re here and we’re free.
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