Eight strategies that have helped dentists maximize their income and reduce taxes, in addition to other expenses. This in return allows additional monies to be working for them and their families.
There are many ways to maximize your net worth. Spend less, make more, get high rates of return and so on. While relatively none of these alone will be the silver bullet to your financial independence, a coordination of them could be a great start.
Following are eight strategies that we have seen our clients implement in their practices to help maximize their income and reduce taxes, in addition to other expenses. This in return allows additional monies to be working for them and their families.
1) Utilize internal marketing
Incentivize visitors to write Facebook/Google Plus/Yelp reviews in the office. The incentives don’t have to be much; maybe it's gum, $5 gift cards, a sewing kit, chapstick, pens, etc., but this will serve as a reminder for patients to check in and leave a review right while they are sitting in the waiting room. This way you know it gets done and they in turn have a chance to win something from the "social media grab bag."
2) Thank patients for referrals
You can reward patients for referring your business with a gift card, however not everyone is money-motivated. Perhaps a hand-written thank-you note could go a long way to thank your patients or even other referring doctors for giving your practice the highest form of a compliment: a referral.
3) Call patients
An introductory call to a new patient could be a meaningful and positive way to start the relationship. Introduce yourself, your background and answer any questions they may have-you may be able to ease their fears or soothe their anxiety about switching dentists or coming to see you. Ideally, you would see your first time appointment cancellations go down by implementing this.
Furthermore, call them to follow up after their appointment. How did it go? Did it meet their expectations? How about giving them a call after having a procedure done with another specialist? If you referred them to an ortho, perio or endodontist it would really stand out for you to follow up with your patient to make sure they liked who you recommended them to. It also shows concern for them beyond just the appointments in your office and helps verify that who you are referring your patients to is doing good work.
4) Create a spa experience
Everyone is about efficiency these days. Why not allow your patients to get two things done at once? Offer to clean their jewelry or give them a paraffin hand wax treatment while they are being seen. Time is money for them as well and that escalated patient experience could really set you apart from the dentist down the street. End their appointment with sorbet as a palate cleanser. This goes far beyond the popsicle you may hand to the kids.
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5) Open up another operatory
If you aren’t already renting space out to another specialist (another potentially good idea!) and can justify the expense with bringing in another $250k-$280k of revenue with additional space, you may want to consider this. Banks are lending more than ever if you need financing for this project or you might be able to get financing through product sales companies. This could allow you to work more efficiently or to even hire an associate.
6) Have a strong brand
Is your branding a manifestation of your values, mission and vision? Are you communicating your identity? Have you thought about these items as they relate to your practice? Are your employees an example of these items to your patients? Investing time in your brand and client experience can have long lasting effects on your production and future growth.
7) Save more money pre-tax for retirement
So you have maxed out your 401(k) contribution and you are paying your spouse enough for them to max out theirs (and qualify for social security). Do you have a profit-sharing plan component? What about an additional defined benefit plan? Cash balance plan? Depending on your age, demographics, and cash flow in the practice you may be able to hit your retirement goals sooner by exploring these strategies in addition to the traditional 401(k) model.
8) Take advantage of tax deductions that many dental practices qualify for
Buying a new business car, Section 199 manufacturing deduction for onsite production of crowns, inlay, onlays, etc., equipment purchases utilizing Section 179 expensing election and so on. If you work with a dental specific CPA they should be making you aware of all these types of deductions and many more that pertain to the dental community.
The most important thing would be to have a plan. A plan for your business and a plan for your own financial future. Implementing many of the above techniques require accountants, consultants, marketing people, etc. but do not let all of those energies go to waste. Developing a financial plan in order for all of the efforts provided by the “coaches” on your team to be coordinated is crucial. Your practice itself is not a financial plan. If the average practice sells for 75 percent of revenue1, that may only end up being two years of your income. A financial advisor can assist with having a strategy in place so that if you die too soon, live too long-or any number of scenarios in between play out-you and your family will still have the potential to accomplish your goals.
1Source: McGill Advisor; www.mcgillhillgroup.com