As a dentist, you face some unique financial challenges that not many other medical professionals have to deal with.
Your line of work requires having multiple private treatment areas and plenty of expensive equipment and treatment chairs.
How can you build a thriving practice, run a business and reach your personal goals without going into debt? These tips can help.
Do your research before starting a private practice.
Building your own practice is a rewarding business endeavour that can furnish you with a comfortable retirement, if you do it right. But should you start your own clinic from scratch? Buy into a practice with other dentists? Purchase an existing practice? Each situation has its own pros and cons that you need to weigh before making a decision to dive into private practice.
Choose the right location and target market.
The decisions you make on where to practice and who to market your services to will impact the amount of profit you generate. Have reasonable expectations and do your due diligence to find out what the demand for dental services is like in a given geographic area before moving ahead with plans to build or buy a clinic.
You might be tempted to buy or build big at the outset in anticipation of an influx of new patients. You want to be prepared, after all. But you also need to be practical and hold a conservative view of potential growth. Try to maximise the amount of space you do have and make plans for expansion only when your revenue justifies it.
Have a financial plan for purchasing dental equipment.
Dentists face more expenses than most medical professionals, given the treatment chair and other specific tools you require everyday.
You can pay cash, which is ideal if you can, but that can impact cash flow. You can buy less than the best or second hand, but that doesn’t give the right impression nor provide the best experience.
Taking out a loan may be the smart option. Medical professionals can get great access to finance, and the right equipment could give your practice a needed boost. But make sure you get advice from a medical finance expert first, who understands your situation, knows what you can afford and can find the best deal on the loan market for you.
If you go down the path of a loan, make sure you understand how the repayment plan works and what’s expected of you. If you don’t think you can afford to pay off the loan in a reasonable amount of time, don’t make the purchase and set as a future goal to work towards, instead.
Ensure you have sufficient insurance cover.
This is something that’s easy to overlook if you don’t think you’re at risk. Insurance should provide 360 degree coverage – protecting your investment in that costly dental equipment, protect your professional reputation and will protect your family and finances in the event of an adverse event.
Look for ways to cut back on overheads.
You don’t want to go cheap and cut corners, but you do need to be prepared to keep up with inflation. Often, the secret to saving your practice money lies in cutting your overhead or running expenses. Look for ways to reduce utility usage in the clinic. Switch internet providers. Do an inventory audit to see if you’re ordering excess supplies or if working with a sole supplier can garner you a discount.
Are you overstaffed? Can you bring in new technology and automation? Always always look for ways to be profitable and justify the operating costs you do have.
Save, save, save.
Saving is extremely important especially if you’re a self-employed dentist who runs your own clinic. No one else is putting money towards your retirement so saving now will affect your standard of living in the future.
Know your tax obligations.
Many medical professionals, including dentists, struggle at tax time. As a high-income earner, you will owe a lot in tax so it’s important to not underpay. But as a business owner, you also have many business expenses that can lower your tax bill which you may not know about.
Start your financial planning early.
If you’re new to practice, then you might be more concerned with paying off debt, buying a house and starting a family. You might think that financial planning is something that happens closer to retirement.
The reality, however, is that financial planning starts now. It will help you manage both your current goals and your long-term wealth creation and retirement goals. The sooner the better!
When it comes to accounting and financial planning, it pays to work with the best people who know the medical profession.
Contact Nitschke Nancarrow, specialists in accounting, financial planning, loans and finance, investment and business for medical professionals. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.