Knowing where to invest and where not to invest in your practice is paramount. You attain abundance mainly by driving up revenues. In some areas of business, it does not pay to cut costs.

Here are three scenarios in which dentists commonly make mistakes:

1. Viewing Staff as an Expense

   Cutting staff compensation is one of the dumbest things you can do. Your staff are your most valuable asset. Period. If your payroll costs are high relative to your revenues, it could be that you have not found a way to make your staff more productive. Rather than you overpaying them, they could be under-performing.

   If some of your staff are unproductive, you need to confront this problem head on. You may have bad staff, or they might lack the necessary skills or training. Weed out staff who are performing poorly and replace them with motivated, capable staff.

   Without capable and committed staff, you won't go too far. High staff turnover will prevent you from succeeding. Too many offices are unable to implement anything because of high staff turnover. They are spinning wheels perpetually.

   If you look at ways to increase the productivity of your staff, you can pay them at market-competitive rates.

2. Viewing Marketing as an Expense

   Marketing that does not work is surely an expense, a loss. On the other hand, marketing that works is a big revenue producer.

   We find that many dentists have unrealistic expectations regarding marketing programs. A 3:1 first-year return is an excellent return. If you spent $5,000 and got $15,000 in immediate treatment income from that investment, that is an excellent return. Keep in mind that many of these patients will stay and you will get more work and treatment in the second and third years. Many will also refer their families and friends. All told, your return could be much, much higher than the initial first-year return.

   Dentists also shy away from marketing because they find it distasteful. You don't have to settle for marketing based on coupons and discount offers.

   Marketing is risky. Don't let any marketing consultant tell you otherwise. Yet, this is one risk you must take. You can minimize your risk by testing things on a small scale before rolling out a program on a larger scale.

3. Making Big Investments That Don't Pay Off

   Dentists often make large investments in new technologies, such as a laser device or some other type of machine, but then clamor that they don't have enough to pay the bills, pay their staff, invest in marketing, or save for retirement.

   Get your priorities right. Certainly, you should invest in technology if you are positive that it will produce a handsome return within a short period of time. Sales reps will naturally paint a rosy picture regarding the performance of the equipment or instrument. The reality may disappoint you. Many new technologies fail to deliver a good financial return and only increase overhead and debt to high levels. While it is important to keep pace with advances in technology, it is not necessary to have every new gadget in your office.

   We've also seen more than one dentist sink vast amounts of money into the construction and design of a new office, one that resembles the Taj Mahal. Unless you plan to run an upscale cosmetic dentistry office, it is usually a mistake to spend that much on an office. The debt and overhead from a mistake in this area will be crippling and could last 10-25 years. Your office needs to be nice, clean, and comfortable, but it does not have to glitter.

What about saving on dental supplies?

You should take steps to identify credible sources at good prices. Carefully consider the quality of what you are purchasing. The product or supplier with the lowest upfront cost is not always the best choice. As with an automobile purchase, you should consider the total cost of ownership (including potential repairs, cost of spare parts, lost revenue from any downtime, and the sheer hassle) of a product before making a decision.

Manage and monitor your inventory, so that you avoid running out of supplies. Overnight/express shipping costs for emergency supplies can run up your supply bills.

How often does your office release orders with the wrong part numbers/codes? This is another common problem in dental offices. Returns and re-shipments stemming from errors in order placement chew up valuable time and cost money. Buy only what you need. Refrain from buying things just because they are on sale this month. Sales reps often visit offices and push all sorts of products that the offices may not really need.

What about saving on dental labs?

The cheapest lab is not always the best solution. Quality is paramount in this case. Be sure they do good work. If you have to rework cases or the aesthetics are not satisfactory, you will end up losing time, money, and credibility.

Invest your time and resources in things that help you drive up revenue.

If our perspective strikes you as good sense, we invite you to request a confidential practice assessment so that we can quantify for you the hidden profit potential in your practice. It's free. Request a practice assessment.