Five Crucial Indicators to Track In Your Dental Businessby Dr. Ron Arndt
Don’t think that by reading a few business books that you’ve ordered from Amazon’s Best Sellers list will make you the greatest Dental CEO in the world. It won’t. Those books are about someone else’s business.
You need to take a look at your dental practice – your specific needs, your financial information and the goals you want to achieve.
What are the critical line items to focus on in your dental practice?
- Receivables turnover: This is a useful number for determining how efficiently your dental office staff are managing collections. This number indicates how many times the Accounts Receivable has been collected. It determines if you’re having difficulties collecting on past due accounts—and what to do about it.
- Gross Profit Percentage: This number indicates the cost of doing business. By calculating your costs (staff, equipment, office) and your revenue, you determine what percentage of your fees is profit. Adjust your dental fees according to this number to maximize profit and your salary.
- Industry Averages: How do your expenses and revenue measure up to industry averages for practices of your size?
- Your Profit and Loss Statement: To manage your “P&L statements”, look where you can reduce expenses or increase fees according to your increased value.
- Growth and Shrinkage: Analyze what your practice has done this quarter, compared to the last quarter and prior year periods. This will enable you to see if you are growing or shrinking – and then you can make a swift management decision about what to do.