Profitability of dental practices in the UK varies wildly – some stay afloat with a profitability of a few percent of their revenue, some rake it in with profits approaching 50% of turnover, and others can’t seem to cover their costs and end up going under.
Whether you’re a practice manager with a hunger for the business side of things, or a dentist who prefers to keep his head down and get on with treating patients, one thing is for sure – profitability is what will determine whether your practice will still be providing you with an income this time next year.
Here are three key tips for ensuring dental practice profitability.
Work Backwards From Financial Targets, And Track Constantly
Perhaps the best way to make sure that your practice turns a healthy profit is to work backwards from a financial target, using the most realistic figures for costs and revenue. That way, you’ll be able to see exactly how many staff you need (and can afford) to employ, what you can spend on training and courses, and how many new patients per month you’ll need to bring in to reach your financial goals.
Enlisting the help of a financial adviser or small business coach can be a wise investment here.
It also makes great financial sense to scrupulously track your numbers, month to month, and regularly sit down and review them with key members of your team. That includes all fixed and variable costs, wages, revenue and irregular expenses.
The benefits are significant – costs have a habit of sneakily rising when you don’t track them, and furthermore, tracking in itself is a proven performance driver in small businesses.
Make Use Of Every Square Foot On the Premises
If like most practice owners you rent your premises, you’ll be paying a premium price for a quality property in a central location.
It can be eye-opening to break the cost of the lease down to a per-foot number – that way you can see exactly what you need to earn per square foot to at least be covering the cost of rental. It’s usually not a small figure.
There’s two takeaways from this – choose your premises carefully in the first place, and make use of every inch once you’re set up. Each room should be a source of revenue, be it a reception area or a treatment room. Pack and stack supplies efficiently, and store them in places that are no good for anything else – any large space should be put to better use.
Stay On Top Of Your Marketing – Through Good Times And Bad
A sad but unavoidable fact of running a dental practice is that patients will leave your practice. They move house, they leave the country, or they simply drop off the radar for a while.
That’s why it’s so crucial that you keep marketing your practice consistently, even when business is booming.
The biggest mistake any service business can make is only marketing when business is slow. The reason for this is that there is usually a delay between marketing efforts and results – a big marketing push will only result in new patients walking through the door weeks later down the line.
So if your practice has been wrestling with the “feast or famine syndrome” – where you’re fully booked for three months, but then struggling with a half empty practice for weeks after, then consistent marketing is the answer to your woes.
These three keys should help you keep your practice profitable. Of course, the business side of things is just one element of success – the core of your practice is your staff, and we’ve made it our mission to connect you to the best candidates in the area.