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April 2009 Newsletter
Profiting During A Recession
We've been saying for some time now that the economy is in a recession. We have seen plenty of negativity - in home foreclosures, job losses, bank closures... Not to mention, of course, our beloved stock market. This has definitely resulted in tough times, but it will pass and there are many things you can do, not only to get through it, but to thrive and come out on the other side in great shape.
Case Acceptance
During these hard times, it's very important that orthodontists become more flexible in their payment arrangements. Many patients with an expressed interest in starting treatment, especially during these economical hard times, should be treated as if they are royalty to the practice.
Consider offering a third-party payment option such as "Chase Healthcare Financial" to combat possible financial resistance. Chase Healthcare Financial offers a zero initial down payment and up to 24 months with no interest. This allows you to stay competitive without compromising your own office payment plans.
Creating Budgets
While it is always important to examine the expense side of your practice, it is especially crucial in the present economic environment. A well planned budget is a magnificent thing. It can help you cut back in areas where you spend too much money. It can also help you SAVE more for your future needs. Creating and following a monthly budget is simple.
First, figure out where you spend your money - track all of your income and expenses for the last 12 months. Be sure to count even the most seemingly minor of expenses. Once you know how much you spend, you can figure out areas to eliminate. Create a budget for each area of the practice and hold monthly meetings to make sure you are obtaining those goals. The following is a standard guideline for establishing budgets within your practice.
- Staff salaries 23%
- Orthodontic supplies 9%
- Business management expense 9%
- Occupancy expense 9%
- Total practice expenses 50%
Reducing Days Worked
With a decline in case acceptance, fewer new patients, general dentist's not referring and a decrease in income, there is no better time than now to re-think your current schedule. Most practices can efficiently run working only 12 days per month. Thus, reducing staff expenses and increasing the bottom line net income.
Staff Employment
More now than ever, there are an increasing number of highly skilled employees looking for employment. If you have ever considered replacing some of your higher paid problematic employees with those willing to work for less - now is the time. In addition, offering your current employees a lower wage during these challenging times is not an uncommon course of action.
Credit Card Spending
Unfortunately, when cash is scarce, many of us turn to credit cards to help make ends meet. And while they can be a very useful part of your financial arsenal, they can easily turn into an enemy if you're not careful! What to do? Cut up all but one or two cards and - whatever you do - don't put more expenses on them than you can afford to pay off IN FULL each month!
Building Lease Terms
Many office building property owners are experiencing tenants becoming late and or delinquent on their monthly obligations. Rather than loose good long term tenants, most building owners are willing to renegotiate the lease terms for a period of time. A simple phone call may save you thousands of dollars in the next few years.
Equipment Loans
While you have every intention of paying your monthly long term loans, the economy may be affecting your ability to do so. Many loan companies are willing to work with you by changing your payment arrangements to interest only for several months and/or for the next year. Thus, allowing more positive cash flow on hand for other expenses.
Lab Expenses
With many offices delivering up to 50 to 60 retainers a month, lab bills can be very expensive during these economical challenging times. Using Essix retainers and or bonded lingual retainers made in house can reduce this expense greatly.
Inventory Expenses
It's easy to become reliant on one or more companies when ordering supplies. You've worked with these companies for years, you know the sales reps and they know what you order. However, most orthodontic supply companies are offering significant deals. When purchasing supplies take the time to comparison shop between vendors.
Gift Giving
Although gift giving is an essential way to say "Thank You" to referring doctors , taking them to lunch is a more cost effective way to maintain the relationship. Deband bags filled with goodies on removal day is a fun way of celebrating patients accomplishments. However, during this recession, I think most patients will be just as happy getting their braces off without the gifts and the added expense. T-shirts with your logo on it may bring a temporary smile to a patients face, however, during these hard times it's more likely to bring a long term frown to your check book. Monthly games in the office do create excitement but can be limited to once a quarter rather than monthly.
Miscellaneous Savings
Although elaborate letterhead is a nice representation of your practice, creating a similar look using your own practice management software system will save you thousands of dollars a year. In addition, you can order larger quantities of your current letterhead to lower the expense significantly. Rather than continue to purchase new printer cartridges, find a refillable cartridge service in your area. Have a staff member re-fill them once a week. This service alone will cut the expense of printer ink in half. If you're cleaning service is weekly, assign chores to staff members to eliminate the expense. If you have a yard surrounding your building, have the gardener come once a month rather than weekly. Make sure all computers are turned off nightly as well as reducing the heater and or air conditioner as much as possible prior to leaving the building. When money is tight, even reducing the most basic of necessities can increase or maintain your net income. If you would like to learn more about these options I invite you to attend one of my upcoming webinars.