The public health emergency that has risen from the coronavirus epidemic is unprecedented in living memory. The stock market has dropped in reaction due to the uncertainty we all share about our future. 

Right now, dental practice owners are all facing the same insecure feelings about their future and most business owners in all industries across the world feel the exact same way. It's important we listen to our public health officials for guidance while also juggling the hard decisions we will make about our businesses in the upcoming months.  

What is to your benefit, right now, as a dental practice owner, is that you run a healthcare practice. You have a more secure business model than most sectors outside the healthcare industry. 

And while there may be changes with how healthcare will be managed or administered during this public health emergency, you can rely on the readiness of your dental expertise and be able to focus and act on whatever comes next.  

To be as proactive at possible, we at Four Quadrants Advisory provide below what we feel are the most urgent financial considerations you should apply RIGHT NOW to calm the storm.

1. TALK TO YOUR STAFF ABOUT COVID-19 AND HOW IT WILL AFFECT THEM AND THEIR FAMILIES  

Take time to educate yourself and then listen to your employees’ concerns about the coronavirus. This establishes continued trust during a time of crisis. Tell them this crisis puts every business on the planet in an unthinkable position to decide how to prioritize employee concerns about health and job security. 

• Tell your employees what guides your decision as a practice owner is, first and foremost, mandates by national public health officials and state, local, and national governments and state dental associations. Because the CDC confirms how easily transmittable COVID-19 is, as a business owner, you must respond responsibly.
• Second, when it comes to job security, remind them you're all on the same team and must come together to support each other during this time. If that means cutting back hours, let’s make sure we know the needs of each staff person and create accommodating schedules. 
• Again, this seems drastic, but leaders across the world are also making these hard choices. What’s important is that you emphasize you’re a work family and that you’ll get through this together. 

What about labor laws during this time? Remember, although we have 20+ years' experience as dental specific financial advisors, we aren’t labor attorneys.

If you have questions about regulations around the safety of your staff, etc. please seek that information through your attorney or the Occupational Safety and Health Administration.

2. STREAMLINE SCHEDULES, OFFER THE MOST CARE YOU CAN AND OFFER JOB SECURITY

Streamlining schedules will help you get income and your patients get the healthcare they need before mandates from the state arrive.  

• Each state has made different recommendations on business closures. It’s important you weigh that advice with what’s best for your practice and your patients.  Is the closure notification a mandate or a recommendation?  
• Until the state gives a mandate to close, consider staying open for limited hours to provide the most healthcare you can to your patients while ensuring staff job security so they stick with you throughout this difficult time.  

If you cut back practice and staff hours, we advise you try to consolidate days down as much as possible. Keep an open mind with scheduling during this difficult time and collaborate with your staff on shifting work hours to early morning or evening may be helpful. Whatever works for everyone.  

• Try adding a virtual waiting room.  Post a sign on your office door telling your patients to text/call when they arrive and then sit in their cars until you are ready for them.  Call them when you are ready to see them. 
• Discuss how to reserve specific hours for specific types of patients (i.e. elderly from 8-10am, etc.). This will help you alleviate patient concerns with getting treatment during a partial or temporary shutdown of your practice.  
• Cutting hours is a collaborative effort. Ask your staff if there are any volunteers in the office to trade or give up hours so the schedule can meet the needs of everyone in the office.  
• Consider cycling employees throughout the week. If you normally have 3 hygienists and only need 2, you can rotate between who has an off day and who doesn’t. 
• Make all hourly employees clock out when they are not working.  If the office needs to close, tell your employees whatever vacation time they have can be applied during this time.  
• If a staff person doesn’t have any vacation time, or it is all used, you may have to consider 2 things.  1) You won't be able to pay them or  2) You will only be able to pay that employee a portion of their pay (25-50%) of their normal pay. Try to offer a percentage of their pay that offers job security now and in the future.
• If you can't make accommodations, give full-time employees preference over part-time employees and then seniority from there when drawing schedules.  
• Prioritize work of the people in charge of collecting money for the practice. 
• Another option that you could use is to temporarily lay off employees with the full-intention of hiring them all back.  If you lay them off, they can claim unemployment and at least be paid something.  Though this may hurt your unemployment rates moving forward, it will cost you more to have to re-hire and train all new staff.  The new Covid-19 stimulus package may be able to help present additional options. 
• If, after talking to your staff, you sense too much insecurity, put in your mind the possibility of having to hire more staff as a result of the possibility of staff leaving because of the shutdown.  

3. CONTROL COSTS BY SEEKING CREDITOR RELIEF

Working with staff to manage hours and seeking creditor relief will account for over 50% of your overhead costs and cashflow outflows of a typical practice.  

• We encourage you be as proactive as possible with banks, landlords and supply companies about any relief they are willing to offer on loans, accounts and payments that are owed.  
• We are seeing many banks and supply companies that are very willing to work with you because they are in the same boat you are. 

4. ORDER 2-3 MONTHS OF SUPPLIES YOU NEED 

People all over the globe are stockpiling goods in preparation to hunker down for whatever period of time health officials advise is best to distance ourselves.

• This means, in the future, you’ll probably face back-orders and dramatic increases in cost of supplies. Don’t waste time on this.
• You may not need to worry about toilet paper, but we advise you order supplies you usually order within a 2-3 month time period. This way, you’ll have what you need now until new mandates arrive, and you’ll be ready to serve patients when social distancing rules decrease over time.  

5. INCREASE YOUR LINE OF CREDIT BY 50%

Many dental practice owners have lines of credit for situations like this, if not, you’ll have to be more strategic about what to do next. Making cashflow decisions about when and if you pull from a line of credit depends on how you talk to your bank.

• Start the conversation with your banker. Tell them you'd like to receive any of the relief solutions, like lines of credit, they’re providing during the COVID-19 pandemic.  
• Obtaining a line of credit can take a lot of time, so start now if you don’t have one.  If you do, have your banker increase the line by as much as 50% to give you more breathing room.
• If the state mandates sustained closure of the practice, you’ll need to rely on your bank, or any avenue you get cashflow, for support.  Now is the time to leverage compassion and cooperation.    

6. STAY INFORMED OF GOVERNMENT AID

At this point during the crisis, the U.S. government is making mandates on social distancing and in the process of delivering bills, every day, that provide relief to businesses and the public.  

• Just in the past week, we’ve watched the federal government address this crisis by making drastic, sweeping relief packages in the form of relief bills and stimulus packages to the economy.
• A lot of these bills go through changes as each chamber of the Senate and House make compromises to meet the needs of their constituents.  

As regulations, mandates and healthcare information is released daily, we’ll be analyzing the information and providing dental specific financial advice for practice owners during the COVID-19 crisis. Sign up to receive updates.

7. PROTECT YOUR ACCOUNTS ACROSS FINANCIAL MARKETS

Both the Fed and stock market continue to act uncharacteristically from their historical behaviors.  The Fed has slashed rates everywhere and is pumping trillions of dollars back into the economy.

• Panic has gripped investors around the world. This may be out of your control, but you can act now by protecting your financial accounts.   
• Reach out to your advisor to take positions that prevent further substantial erosion of your accounts and work with them in the next 2-3 months to remain vigilant and fluid with future decisions.   

Stick together, stay safe and stay focused on how to secure you, your staff and your family’s livelihoods during this time.

HOW FOUR QUADRANTS CAN HELP PRACTICE OWNERS

We at Four Quadrants Advisory understand how the COVID-19 outbreak has turned the whole world upside down.

• We have 20+ years’ experience giving dental practice owners a peace of mind through our guidance on how to secure their business in good and bad times.  
• We helped our clients’ endure both the 2008 recession and the ups and downs of running a dental practice. We‘re still here to help dentists endure during the era of the coronavirus crisis.  

If you’re a dental practice owner, we offer a free one-on-one strategy session about how to manage your finances during the global coronavirus crisis.

If your CPA doesn’t provide dental-specific accounting, by managing tax liability throughout the year, painful tax surprises will arise.

If you're a dental practice owner, tax uncertainty doesn't have to be your tax reality. Bad tax planning also means you won't save money consistently.

WHAT DO DENTAL TAX SURPRISES LOOK LIKE?  

A tax surprise is any tax refund or taxes owed over $10,000 in a given year. If this is happening to you, something is broken and your current tax advisor or accounting system is hurting your practice.  

1. FLAWED TAX ESTIMATES 
   Most accountants calculate your current estimated taxes based on your prior year profits. This works great for the Q1 payment, but most accountants also fail to evaluate business profitability throughout the year. What happens if you have decent growth and a drop in expenses in a given year?
   
   In a practice that collects $1 million a year your practice's net profit can easily swing more than $100,000. This translates into a $40,000 surprise your accountant didn’t detect.
   
   
2. INFREQUENT RECONCILIATION OF BOOKS
   Most dentists are lucky to meet with their accountant once or twice a year. And when they typically have the “tax-planning meeting” late in the year, much of the opportunity to spot and avoid tax surprises has passed. A semi-annual or quarterly reconciliation won’t cut it.
   
   Outdated numbers lead to a lack of monitoring. This lack of monitoring means your accountant didn’t catch the $100,000 in profit. Instead of celebrating this growth, you now have little time to put together an additional $40,000 to cover a tax surprise. 
    
3. IDENTIFYING PROBLEMS TOO LATE 
   An unexpected increase in profit means new taxes to worry about. Your accountant didn’t identify this problem and now new problems arise. Just as you pay for the mistakes of last year, you will also have to pay the estimate for Q1 this year—the proverbial “double-whammy” of tax season.   

   
HOW DO MOST PRACTICE OWNERS DEAL WITH TAX SURPRISES?  

Many dentists deal and accept poor tax planning, but don’t realize how it keeps them from consistently saving enough money for retirement.  

• In a desperate attempt to cover tax surprises, many owners hoard cash in advance as they prepare for the worst.  

• Others just ride the peaks and valleys of thick and thin monthly income waves. They’ll cut THEIR OWN PAY to cover expenses or run the practice accounts thin and this is damaging to everyone. These are cashflow rollercoasters you, your employees and your family should not be subjected to. 
   

HOW CAN FOUR QUADRANTS HELP?  

At Four Quadrants Advisory, we plan to avoid tax surprises and calm tumultuous cashflow waves.   

• No matter who you are or what you produce, your focus should be to build long-term wealth.  
• Our goal for every client is to help them save $100,000 or more each year for retirement by stabilizing their practice income and getting in front of any major expense—like tax surprises.   

 
Interested in learning more? Book your free 30-minute strategy session. 

Dentists aren’t usually business or financial gurus, and because of that they can run into a lot of problems when it comes to their finances. One of the main sources of these troubles is poor management of cash flow.

Read the Guide: Financial Planning for Dentists

But if you don’t know what to look for, how can you know what to fix? Here are five common hurdles dentists have to clear to get their cash flow situations in order.

Corporate and income structure

Choosing the right corporate structure and income schedule for yourself and your practice is crucial, and can help solve a lot of other cash problems. Operating as an S-corporation is most ideal, because it allows a dentist to take some income in a W-2, with taxes withheld every paycheck while remaining the business’s owner.

But an accountant might recommend a sole proprietorship to minimize tax responsibilities. This can slow your retirement savings – you can’t match as frequently on income from distributions, which is 100% of your income in a sole proprietorship. You’ll lose a lot of money from failing to look at the big picture.

Debt structuring

Dentists are naturally debt-averse, which sounds a lot better than it is. They’re likely to cut a check for a large purchase rather than financing, and when a piece of equipment costs upwards of $30,000, that could completely deplete your checking account.

It’s absolutely critical to make sure you have a baseline level of cash on hand in your accounts at all times to deal with surprise expenses, and that’s impossible if you pay for equipment and other planned expenses all at once. It may seem stressful to have debt to deal with, but it’s a lot less stressful than having a tax bill you can’t pay because of that shiny new x-ray machine.

Tax payments

The way you pay your taxes is intertwined with how your business is structured. Taxes are automatically pulled from your W-2 earnings in every paycheck, but not from money a dentist takes as a distribution. Practices that are run as sole proprietorships and as S-corps both need to make extra tax payments to cover the amount owed from distribution payments. But if 100% of your income in a sole proprietorship is coming from distributions, then 100% of your taxes need to be paid this way. And those bills can get big.

Since an S-corp allows you to be paid in W-2 income as well, that means that only a fraction of your income tax is your complete responsibility via quarterly tax payments. To an accountant, that may seem more complicated – after all, it’s two tax returns that need to be filed. But for the dentist, it ensures cash flow stability.

Quarterly tax payments fluctuate as your practice does. If you’re growing and the accountant doesn’t take that into consideration, it could mean that at year end, you haven’t paid enough taxes on your distribution income, and you could be hit with a surprise $80-100k payment. With the S-corp, with less of your taxes paid this way, even if there’s a surprise payment it won’t hurt nearly as much.

Overhead issues

An established dentist, one who’s been in charge of a practice for 8-10 years, should be running at around 55-60% overhead. In my time at Four Quadrants I’ve seen practices where the overhead level is closer to 90% or even 95%. That’s just preposterous. If your overhead is that high, something is horribly wrong with the way your practice is being run.

In a million-dollar practice, for every 1% drop in your overhead, that’s around $10,000 in savings that you can take home. Paying less improves your cash flow and puts more of your money where it should be – your bank account.

Decision-making

Think about the decisions you make in your practice. How many involve spending $30,000? Probably around one or two a year. How many involve spending $5,000? That’s probably more like one or two a month. Each one doesn’t seem big, but they add up fast – especially if you make the wrong choice.

When you make decisions about things like smaller equipment purchases, raises to employees, or fee increases, it helps to have someone on the outside to advise you. At Four Quadrants we have a “5K Rule” for our clients – if something’s going to cost you $5,000 or more, whether in your practice or in your personal life, ask us about it. We’ll look at the big picture and help you decide if it’s worth it, if now is the right time, and if there’s a strategy to help pay for it easier.

By Brogan Baxter
Chief Operating Officer, Senior Analyst
Four Quadrants Advisory

Early on, nothing comes easy.

You have to scratch and claw for the first five new patients. Then you bend over backward to earn the next 10. the effort required to get those first 15 customers is enough to crush a person's spirit.

But you keep carrying on because Dental practices grow slowly day by day, month by month. You gain three patients and lose one; then you lose two, gain one. If you look back over a year, however, you may have 50 or even 150 new patients. “That’s no small feat,” you say. “There really is no such thing as an overnight success.”

But during periods of growth the Dentist should ask what’s fueling it - instincts such as “grow or die?” Many Dentists grow their practice just because they want more production. But why? Because you want to make more money?

Here’s a little-known fact: increasing production can actually cause you to make less money. That’s because in a rush to earn more, overhead skyrockets and you can be stuck with slightly more income and a lot more money going out the door.

Here are three ingredients we make sure our clients — brand new and longtime ones— include as part of a “smart growth” instead of “fast growth” strategy:

1. Increase your production and maintain your overhead
2. Maintain production and reduce your overhead
3. Increase your production and reduce overhead

Don't Be Afraid to Ask for Help
To grow your income, you need a good financial team on your side. You need quickly-reported numbers, you need to have a pulse on your finances and you need a quick interpretation of your situation. If a negative trend begins, you need to know so you can act fast to counteract it.

Is overhead popping up five months in a row? Know fast, so you can nip it in the bud. In fact, his applies both to your production and to your overhead. You need solid numbers on both no later than the end of next month, and the numbers need to be reconciled and analyzed by your accountant. To identify trends, compare them to the same month last year and also to the past few months of this year. That way you can see in real time what’s happening in your practice’s financials, and whether it’s a seasonal effect or something new.

Even if you grow intelligently, you can still run into issues. For example, you might get a good news/bad news call from your accountant: “Good news! You made a lot more money this year than we were expecting! The bad news is that means your tax bill ius headed into the five figures.” Without timely and frequent tax estimates, you can end up with a nasty tax surprise at the end of the year. And that will certainly put a damper on your booming business.

When managed poorly, growth will actually hurt your Dental practice and cash flow. But when you do it right, growing your practice will do nothing short of change your life.

Visit our “how we help you” page to view quick stories of how we helped ACTUAL clients. (No actors here, we knew you could tell the difference).

If you think you need a better plan than you have now, and sooner rather than later, contact us today!

By Brogan Baxter
Chief Operating Officer, Senior Analyst
Four Quadrants Advisory

Think of five Dentists or Specialists you know pretty well.

Three of them have been or will be victims of some form of embezzlement at some point in their career. This crime knows no bounds – unsuspecting General Dentists and Specialists, Solo Practitioners, group practices, Dentists in small towns and those practicing in urban areas are all at risk.

That means you’re at risk too. 

Dental Practices are juicy targets for fraudsters because those leading them don’t have a business degree and are so busy seeing patients the can't constantly monitor the situation sufficiently enough.

According to a 2007 study by the American Dental Association, the Dentist’s system of controls (day-end balancing, review of software audit logs, fraud found by the Dentist’s accountant, etc.) lead to the discovery a paltry 19% of the time. So that means someone discovered the remaining 81% by accident.

But the best ways to prevent theft in your dental office may seem counter-intuitive. Instead of implementing new layers of control (and therefore complexity), we recommend tightening the way you manage your office every day.

To start with, remove any opportunity to embezzle.

Simple? Yes. Effective? Absolutely!

Not only will this reduce the risk of fraud, it will also improve other areas of your practice such as cash flow and the reduction of tax surprises, while also making you more aware of your practice's financial stability. Stopping someone hell-bent on stealing from an attempt to do just that may be impossible, but catching them before they damage your livelihood is not.

What if you think someone is already stealing from you? Again, we recommend thinking counter-intuitively. Knee-jerk reactions many times just lead to a sore leg. But to be blunt: DO NOT call the police. DO NOT confront the person your think is the perpetrator.

A bad move has the potential to make your situation far worse, especially if the person you suspect isn’t the thief after all. If you waste time targeting the wrong person, that gives the actual thief time to destroy evidence.

While no one has taken advantage of our clients while we were working for them, some of our clients have come to us as victims of previous embezzlement schemes. While each case was vastly different, there was one thing that rang true in each case: the embezzlement action was always larger, wider and occurred far longer than the Dentist ever thought possible.

If you suspect a theft is taking place, the best thing you can do is preserve evidence, conduct a quiet investigation and NEVER confront the thief without backup.

There are several things that must be done to improve the outcome of a situation that is going to be messy no matter how you look at it. Prosperident, the world’s largest dental embezzlement investigation firm, reccomends taking the following steps if you suspect someone is ripping you off:

1. Continue to act normally and avoid behaving unusually. Conduct your investigation in a way that does not disclose suspicions.
   
   
2. The Dentist must be extremely guarded about discussing suspicions with colleagues, staff members, etc. And what about that one special, most trusted employee? Statistics show that individual is the MOST likely to be the perpetrator.
   
   
3. Don’t fire anyone until you've gathered the evidence. The amount the employee may steal from you in the relatively short time it will take to complete an investigation pales in comparison to the cost of a wrongful termination lawsuit.
   
   
4. Obtain professional advice. Embezzlement investigations are not a “DIY” project! You may not know what to look for and will likely need the quiet assistance of staff who might be friends of the suspect.
   
   
5. Preserve evidence. Your company’s computers contain a cornucopia of information that will be needed to confirm the embezzlement, quantify losses, prepare an insurance claim, proceed with prosecution, etc. However, this information is volatile and can be deliberately erased or overwritten.
   
   
6. Do not dramatically change financial protocols. Looking to make changes without being able to explain the rationale will certainly be seen through by a thief.
   
   
7. Do not report the incident to police until you have gathered all the evidence. It serves no purpose to do this early, and may limit your options in dealing with a thief.
   
   
8. Do not contact insurance companies. If a theft involves obtaining extra funds from insurance companies, the insurance company may have recourse against the dentist for amounts misappropriated.

As I stated earlier, the best defense against fraud is to focus on procedures that improve your practice’s financial stability. Find out what could be wrong, and put yourself on the road to fix it. Download the free Success Kit today and get started.

How does your practice stack up? Click Here to take our quick, comprehensive financial review so we can discuss this with you in more detail.

By Brogan Baxter,
Chief Operating Officer, Four Quadrants Advisory 

The whole reason we regularly share blog posts is to introduce you to concepts that will take your practice to the next level. Virtually every client we’ve brought aboard was not earning enough in the practice or saving enough of their income.

After all, you attended dental school and bought a practice to help people, right? Who knew running a practice would also mean making costly mistakes; some of which you discovered after you could avoid them. 

So while many of the concepts we’ve shared in this space focus on the big picture, there are lots of plaes specific mistakes or bad judgment calls many Dentists and Specialists make when it comes to running a practice.

While we are NOT a practice management firm, we do have a Rolodex full of some great ones we refer our clients to when they need a laser-like approach to fix a specific problem. Occasionally we ask them to write guest blog posts or recommend post ideas. One of those experts is Rachel Wall, owner of Inspired Hygiene, and an expert in getting the most income out of your hygiene team. 

"Having a sharp team is a beautiful thing, but assuming everything is being taken care of is a big mistake," Rachel said. She shared with us five ways you can unlock profits and production from your hygiene team . . . all while lowering overhead at the same time.

1. Perform A Complete Perio Exam
That’s Right! Do this at every hygiene visit AND make sure the data is being recorded. This is a huge area of liability for you and it’s your hygienists' responsibility to collect and analyze this information. One way to find out where you stand is to perform an audit of your charts. Try randomly pulling 20 charts of adults seen in the last 6-12 months. How many have a complete Perio exam recorded in the last year? Chances are very good that if the percentage is low, so is the amount of Perio treatment.

2. Start Treatments Earlier Than You Think
Rachel’s interpretation of the AAP’s Perio Classification system is that Beginning (slight) Periodontal disease is 4mm pockets with bleeding and slight bone loss and 1-2mm CAL. This is a huge distinction for many dental teams. Often, these are the “difficult prophies” or the patients that have three-month prophy intervals. It’s not uncommon for hygiene teams to wait until pockets are 5-6mm deep before beginning treatment while valuable the patient loses valuable bone that could have been saved.

3. Schedule More Time For Hygiene Visits
Oftentimes critical steps are left out of the hygiene exam when time is short. If you move from 40 to 60 minutes for adult recare and Perio maintenance, it’s important to outline exactly what will take place during that time.

4. Expect Enrollment of Restorative in Hygiene
It’s an inefficient use of your time as a Dentist for you to carry all the load for keeping your book full of comprehensive, productive treatment. Empower your team to help you! Set up the expectation and then clearly communicate your treatment philosophy. For instance, your team needs to know when you prefer to recommend a crown versus an onlay. It’s a good idea to schedule time to sit down with your team and outline your specific treatment recommendations regularly, even if the same team has been in place. 

5. Be Sure to Offer Patients Fluoride Therapy
There are very few patients in your practice who would NOT benefit from the application of fluoride varnish and/or a fluoride appliance for home use. Think about it. What percent of your patients have crowns, bridges, onlays, abfraction, recession, interproximal fillings or sensitivity? Educating patients about the value of fluoride therapy and it’s protective benefits will get them on board and more importantly? They’ll pay for it! So for instance. If your practice has 1,500 active re-care patients, skipping adult fluoride therapy is costing you at least $100,000 per year in lost revenue!

If there’s a smart way to increase production we want you to know. And we’re big fans of implementing forward-thinking strategies to improve the profitability of your practice. We also work with practices that seem to be producing plenty but aren’t satisfied with the income that comes from all that work. Once we delve into our clients’ inner-workings, we identify places to make big changes.

That’s why the Dentists and Specialists we work with increase their savings by 50% in the first year and are soon on their way to saving $100,000 or more each year after that.

Maybe we can help you.

Contact our own Brian Wilson at bwilson@4quadrant.com to find out!

The insights practice management firms provide can do a lot of good for your dental practice. But that doesn't mean that it's right for everything, or that it's a perfect fix for your issues. Think of a laser versus a bur. Using the wrong instrument in the wrong situation can lead to disastrous results.

We’ve worked with hundreds of different clients and analyzed the practices of hundreds more. Dental practice problems can be separated into two very broad categories: Procedural (require small adjustments) and Philosophical (require major changes in the approach to one’s practice).

For instance, if your hygiene department is not as efficient as they need to be, that’s a procedural problem that can be corrected and avoided by implementing new policies and procedures. This would be a great assignment for a practice management firm to work their magic.

But if you’re not producing enough, or you have ebbs and flows with your cash flow, sending in a team of practice management experts to do the work of an accountant or someone with an MBA will only lead to frustration. And if they recommend to "just work harder so you can produce more," that will not fix your cashflow issues.

It’s important to note that we are not a practice management firm. In fact, we refer clients to them on a pretty regular basis because they can help in certain procedural circumstances where fixing a very specific problem in a very well-defined area.

If they chart a successful path to Hygiene Department efficiency that’s great! But it doesn’t mean they should help you chart out new paths to profitability by “investing in a CEREC machine" if it doesn't fit your business model. 

Expanding the procedures you offer with a fancy machine may sound like a great idea, but was the Return on Investment figure that won you over calculated generically or with your practice in mind? Did they provide data on how your cash flow will be impacted while your staff undergoes all of the training you will need to run it? Do they even have a handle on your cash flow for the next six months? Do they know? Do you?

What if the recommendation was to retain another Dentist? Have the expenses of adding and retaining another dentist — and the impact on cash flow — been considered? How much do you pay the other dentist, and can you do it without jeopardizing your own income? What happens if you put it off for six months? Do you have anyone intimately familiar enough with your overall financial situation to help you make that call?

Any major decision that you make has to be linked to all the different sectors of your finances. A decision made without at least two to three correlations made between your practice cash flow, your practice debt structure, your personal cash flow, and your retirement can become a misplaced business decision. And too many of those decisions can ruin your retirement or even your practice.

Good practice management firms want to help you fix problems and will be among the first to recommend working with someone else when they see you need a healthier approach to complex tax issues or to reduce your inflates overhead. 

If you feel like you’re on your own island — afraid to take action in any one direction — you’re actually not alone. Practice management might be the first section of the bridge off the island, or it may not be needed at all. You won't know until your overall practice is evaluated honestly.

If you have questions about whether practice management, or something longer term, is right for you, contact us today to discuss your concerns and possible strategies. 

We've also developed a quick, easy (and free), questionnaire designed to give you valuable insights into the current health of your practice. Click here to take it today!

By Brogan Baxter
Chief Operating Officer, Senior Analyst
Four Quadrants Advisory

We’ve shared many eyebrow-raising statistics in this space, but here's one the American Dental Association reported recently that still makes us shake our heads in disbelief: only one in four doctors hired as associates become partners in the dental practice that hired them.

One. In. Four.

That’s especially shocking when you consider part of the reason an associate is hired is because the Dentist sees them as partner potential. For a Dentist especially, your practice is your legacy. With so many swings and misses, how do you go about finding the right partner and eventual successor for your practice? 

Do you sell your practice in parts, or all at once?  Do you even know if you have a choice? How do you make sure you get your money’s worth without gouging your successor? When’s the right time to make the switch? 

In our experience working with dozens of dentists and practice transitions over the years, the Four Quadrants team came up 5 points to consider before you hang a "For Sale" sign over your practice:

1. Stop waiting, start planning: Most dentists wait until it's too late to start planning their practice transition. Don't make that mistake. How much time are you losing? Start planning now, so you don't risk letting your life's work disappear—we suggest starting the process 10 years before you want to retire.  This still leaves all options on the table and allows for you to find the right successor.  Even if you do everything right, what happens to your practice immediately after you sell it and retire is up to you. You can have a custom transition process, and ensure that everything is executed to your liking; this is not a square-peg/round-hole situation. That allows you to find the partner who’s best suited to carry on your legacy, and to protect the parts of your practice that you most value.

2. Make a rigorously honest self-appraisal: Not every practice can handle the requirements of a custom transition. Do you have enough production? A large enough facility? Do you have low enough overhead to be able to take on an associate? If not you may be forced into a walk-away sell – zero to six months of preparation, then you hand over the keys and leave. That may not sound like what you want, so your priority should be to get your finances in order so that you can transition properly.  Again, doing this over 10 years before you plan to retire is ideal. In a way, you’re preparing the nursery for a new bundle of joy, so to speak.

3. Visualize success: If you could write the script, or maybe a time-line, for how the ideal transition comes together for you; how does it play out? What’s most important to you, what do you want to dictate? Don’t try to ask for too much – there will be a lot less interest in joining up with you if you’re perceived as a meddler. Nobody wants to run a practice if they won’t actually be running it.

4. Don’t hide blemishes from your successor: Many Dentists don’t think about how they leave their practice to their successor impacts the rest of their life. But we’ve been worked with dozens of Dentists for decades and let me be the first to tell you - IT DOES! Be up front with your successor, both with your philosophy as a dentist and with what things are important to you. You need to find the perfect successor to your practice, not just the first person who’s willing to come in that’s willing to give you a check.

5. Ahhhh! The Tangled Webs We Weave: Finally you need to evaluate the way in which you want to unwind yourself from the practice. Are you going to quit cold turkey? Are you going to phase yourself out, and gradually sell the practice to your new associate? From our experience, the best for all involved is for you to leave gradually. You get to keep working until you feel totally ready to leave. Your patients get to meet your new partner, and see you work together as a team. And your successor gets the increased goodwill those interactions create. As a result more of your current patients stay and that only creates positive value for your practice.

In the end, a custom transition isn’t just best for you, it’s best for everyone. Keep in mind it’s a transition, not a transaction. If you need help visualizing how your practice will transition successfully call us today at (877)720-6213,  Send us An Email, or fill out the form below. 

By Brogan Baxter
Chief Operating Officer, Senior Analyst
Four Quadrants Advisory

How hard do you work to make your practice a success?

As you prepare to answer this question, what determines your response? Emotional energy? Putting out dozens of “fires” caused by staff or patients? The physical toll patient care takes on your back, limbs and fingers?

We’ve analyzed hundreds of practices over the years; many of them became clients, some did not. Our first impression of so many of them often resembles a hamster on an exercise wheel. Despite all their hard work, they remain in the same spot financially. And despite occasional bursts of energy to free themselves, the Dentists only spin the wheel faster while it contains them in the same corner of the box.

A Dentist who says “I work really hard!” to the question a few paragraphs above often times also says “I need to produce more,” when asked “How can you earn more in your practice?”

“I need to produce more” really means “I need more income," which really means “My cash flow is not good, I have a bunch of poorly structured loans, I spend more than I should, I take too much cash out of the practice, my overhead is high and I’m in the mouth all day so I don’t have time to figure this out.”

Now we’re getting somewhere!

Just before the Great Recession in 2008, the American Dental Association surveyed its members and determined they’re not much different than the average American in terms of financial planning. They found that 96% of Dentists are not saving enough money to maintain their current lifestyle in retirement.

Americans overall don’t save enough, but it’s a bigger problem for the Dentists because a cash-based business such as Dentistry won’t sell for enough to sustain lasting income, and the Dentist’s lifestyle often requires more income at retirement than that average American. We could all learn a lesson from our grandfathers who emerged from the Depression era with a drive to save while at the same time not spending money they don’t have. The Great Recession seems to have created a movement back to this kind of pragmatism today, but time will tell.

When faced with the spinning wheel, our clients work with us to slow it down so they can finally step off and put their energy in a productive direction. Most dentists we work with — those who are producing above $750,000 each year — are already busy enough. They don’t have to produce their way out of their financial doldrums.

Imagine if you could press the pause button and take a hard look at how everything financial in your life and practice is inter-related and then make changes to dramatically increase savings without changing the way you practice. Pure savings. Not returns in the market, not real estate gains, and not promises from hedge funds, options, shorts, swaps, IPO’s, or complicated insurance products.

A Dentist really can save more than they ever thought possible while their lifestyle remains the same. It’s not easy, but it's definitely possible. You can do it with a pragmatic methodology that combines great cash flow, acceptable profit, and a custom financial plan. Are you going to produce your way out of it like the hamster, or are you ready to get serious about saving?

You need a plan and you need a thorough and comprehenisive plan. But how do you build a financial plan without years of training and experience? It’s not as hard as you think – with a little guidance.

We're the only firm in the industry to guarantee that you'll be saving at least 50 percent more after your first year with us. Click Here to find out more about our Financial Plan created with Dentists and Specialists in mind. It will map out what you need to do, and how you can get there. 

By Brogan Baxter,
CFO Four Quadrants Advisory

Today the word “debt” might as well be synonymous with “curious lesion” or “felony.”
And carrying it with you has been demonized by the media and financial gurus for two decades now.

As you have heard it and had it taught to you, getting rid of debt is supposedly the universal key to financial freedom. It may seem obvious that if you’re in debt, you should pay it off as soon as possible.

Dentists especially take on a lot of it because they need expensive equipment and offices to house their practice. Let’s not forget about the 6-figure student loan debt as well.

It's all of these reasons why Dentistry is one of the most capital-intensive businesses to start in the world. But paying down debt as feverishly as possible can get your practice in a lot of trouble. Debt has become more than a pool of money on the wrong side of the balance sheet - it’s an emotional burden you’ve allowed to seep into more of your lives than it deserves. There’s a battle between emotion and logic when facing it down.

But Four Quadrants believes some debt is not only OK, but necessary, to building a healthy practice and retirement. Take that in for a moment . . . debt can be a good thing. We understand putting that mindset in motion is tough and goes against all you’ve been taught previously. Debt is sitting in the seat next to you, while retirement savings seems a long way off.

So what makes some debt "good and some "bad?" We classify the kind of debt on your books as simply “good” if it's a loan to buy a new piece of equipment for your practice, or your mortgage. An example of bad debt is a high-interest credit card.

Therefore, if you have a lot of bad debt, it should be eliminated. The good debt can be managed gradually. In terms of taking on new debt it's important to ask: "Why am I putting the practice into debt?" Is this purchase a need or a want?" So if it’s for something that will help your practice AND can be measured to and proven to make you be more productive, that’s a good move. But if you’re just living outside your means, it’s time to pull back on the financial reins and practice a little more fiscal responsibility.

When deciding whether to invest in something or pay down your debt, think about the “opportunity cost.” If you use the money on one item, think carefully about what you won’t be spending it on. You should strike a balance between debt and savings, but your current situation may require you to lean more toward one or the other. We’ll even go as far as saying that for a dentist to be a multi-millionaire, you must strike a good balance between both.

Despite all the talk about imminent Interest rate hikes -- they still remain the lowest they’ve ever been -- and probably the lowest they will ever be in your lifetime. As a matter of fact, now is actually the best time in the history of financial lending to be in debt. Low rates mean that your practice debt compounds less than it would with higher rates, and the interest is tax deductible anyway.

So if you don’t use cash to pay off debt today, use it as a down-payment for your financial independence when you’re over 65. An intelligent capital preservation strategy is critical as well – that is, to focus on saving more and taking less risk with that money in the market. If you don’t invest in your future now, you’ll have a lot of catching up to do as your retirement age draws closer.

So how do you begin? It's as easy as 1-2-3:

1. Pay off bad debt first.
2. Save money and invest it in your retirement now with a laser-like focus on saving six-figures EACH YEAR for retirement.
3. Once you’re on your way towards a healthy retirement, then you can start building a strategy to pay down your good debt as long as you are also making what you want from the practice.

Make your decisions based on numbers and logic, not on emotion. Debt might not be fun, but it’s a lot more fun than realizing you can’t retire until you’re 80. If this makes sense, contact us directly. If you’re not sure, or need to hear more, download our success kit and we will follow up with your right away.