THE MILLIONAIRE DENTIST PODCAST

EPISODE 31 TRANSCRIPTION

Announcer:

Hello, everyone. Welcome to the Millionaire Dentist podcast brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances, and business practices, to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue, and may not be safe for work.

Casey Heirs:
Hello and welcome. This is Casey Heirs and I have a special guest with us today, the founder and president of Four Quadrants Advisory, Jason Smith. Jason, thank you for joining the podcast. It's great to have you on today. Jason wanted to talk about a specific topic on today's podcast. Jason, what did you want to share with our listeners?

Jason Smith:
Hey, thanks for having me today, Casey. The biggest thing that I wanted to talk about and educate everybody on is when is the right time to call us?

Casey Heirs:
Well, that's a great topic. And from my perspective, traveling around the country, a lot of times dentists and specialists don't know when to look for help, or don't know where to look. Let me start with this. Why do you think practice owners, dentists and specialists, why do you think they attempt to do all the clinical, all the dentistry on their own, but then also the business side and the finance side? Why do you think they don't seek out subject matter experts on things they weren't trained in? Or why do you think they attempt to do it themselves? What would you say to that?

Jason Smith:
I think there's several reasons, Casey, but kind of starting with the personality of what makes a really good dentist or specialist, a great example even is like an oral surgeon, or what a great tactician, even an orthodontist has to be, and even the mechanics of how orthodontia works and braces work, and we get even into that stuff, talking about that with all of our clients across the country. But these people by the nature of what they do have to kind of do everything themselves and be responsible for the care of that patient. And sometimes those personalities and the things that make them such a good dentist or specialist, unfortunately don't always relate to being a good delegator.

Casey Heirs:
A lot of times high achievers have a hard time delegating.

Jason Smith:
And they want to keep control of that and they want to try to do it themselves because they are high achievers, just like you said, and it takes them some time before they finally get to a position where they're ready to kind of blow the whistle. And except the fact that they can't do everything by themselves and have the type of success that they want to have.

Casey Heirs:
I've been told by many successful people, to reach greater success, know what you're good at, identify what you're not good at, and surround yourself with people who are good at the areas you might not be as good at in. And so what we're talking about, it's not the clinical, but it's the business side of dentistry. Let's jump into quantifying it. So it's not just when to seek out help or when not to, but what's at stake here, Jason, and you've seen this for over 20 years doing this, but these practice owners they're at that crossroads of should I look for some help on some of the things on my practice or not? What's at stake financially? Let's quantify it.

Jason Smith:
Well, there's just millions of dollars at stake in regards to being able to get the right help. And also the level of stress that can be reduced is also magnified by way over a 100% regards to what they're going through and how they're feeling. But how about we point to what one of the biggest problems I think that they're going to see is. I want to set kind of the premise for you that a lot of people come here are already successful. Most of them already have a nice practice. Most of them have been doing this for some time, probably five to 10 years out, and certainly we bring people on that are in their mid 50s and early 60s too. But generally speaking, the client that comes here has already done some marketing. They already have a nice practice, and they're probably even producing well, and they've learned some delegation and they finally hit a point where they just cannot get through that next level of success.

Jason Smith:
And typically the first thing that stands out then as a big, big problem is cashflow.

Casey Heirs:
Now when a dentist starts to feel like all their hard work isn't being reflected by their income, by their practice account balances, by what they're putting away for retirement, by their cashflow, they typically have a couple routes they can go. I was talking to a practice owner yesterday and they mentioned that when they have questions, they'll talk to a mentor, they'll talk to someone they went to dental school with, but they acknowledged their situation's different and they admitted they'll get on YouTube or they'll start Googling to find answers to their specific issue within their practice. And they were very forthcoming with that's just not good enough. And they need to know the answers to these questions because the implications around their practice are seven digit decisions sometimes.

Jason Smith:
Well, what's really interesting about dentistry is you can have somebody that makes a half a million dollars plus a year, and I'm talking not production of course, just pure income. And they can have terrible cash flow in the practice and get down to $4,000 even a month, if not even worse, and they can have terrible cash flow at home, but still at the end of the year, the tax assay five to $700,000. And that is just something that is a real unique characteristic to dentistry. And that a lot of people, frankly, they just don't know how to fix that. There's help for practice management issues, in regards to leadership and building maybe a better team and staff. Of course, there's all kinds of just pure investment people out there, but when it gets into stuff like "Can you help me make more income, lower my overhead?" things of that nature, and increase my cash flow. That's a little bit, frankly, an area where a lot of people just don't know where to turn for help.

Casey Heirs:
No, I completely agree. I'm always impressed when a practice owner has the awareness that they're really good clinically, but that there could be a better way. I was actually speaking with a specialist this week, this person in their 30s, they're making over a million dollars, they have a couple partners, and even in their 30s making over a million dollars, they had a keen awareness that the business side of this partnership with two other owners is very challenging. And what they found was their income was good, but they were having a horrible time making decisions. And do they build, do they acquired, all these different moves that practice owners make, they're starting to realize that while their income and cashflow was okay, there's a whole other side of it with decisions that they are almost becoming paralyzed making because they've got three cooks in the kitchen and they all have different opinions. Can you speak to that a little bit, of how having a separate entity to help make decisions, and even if a single owner, the spouse and the dentist sometimes can butt heads.

Jason Smith:
The biggest thing I can underscore, and well said by you, is efficiency. And what we see all the time is you can have a incredibly successful, say it's a large production number, in a practice and whether it's an individual dentist or specialist or it's a group. And what happens is as that practice grows so do the inefficiencies. And also what grows is the pressure to have to produce more to get yourself out of it. And even in practice management, there's wonderful reasons sometimes to use practice management, a lot of times, that's really not the solution somebody's looking for, because very rarely do you see practice management lead to more profit. And a lot of times that messaging even in practice management is we've got to produce more, more, more. It's always about more, more, more. And finally that doctor looks up and says, "You know what? I'm tired. I'm stressed out, and I need a break."

Jason Smith:
And I just want to share with you over 36 months, these are average statistics for one of our newer clients, overhead is down 11%, income is up 25%, retirement savings is up 674%. And their increased production is only up 1.7%. We don't put more pressure on the doctor to have to produce their way out of it. There is typically so much cost and waste going on in that practice, and even lack of tax planning, that if we can blend all that together to find and right the way to find the right formula for that practice and everybody's different. Typically there is just a absolute waterfall of profit and potential to get back to the doctor.

Casey Heirs:
Jason, that's a great point. 1.7% of increased production. It's a lie a lot of practice owners have been told all these years, if you want to make more, simply produce more. And for our listeners, those statistics that Jason just mentioned, ask yourself, what would that mean to you? And at 1.7% production, it proves that it's not necessarily about more but about better.

Jason Smith:
Well, let me jump in there, Casey, you're spawning an idea. And I want to share this with you. For example, today for a general dentist, I would say the bar, it used to be a million dollars in production a year, but the truth is now for a good practice, a really nice number is, in gross production of course, and including hygiene, is about 1.5 million a year for a solo doctor. And I am talking general dentistry, not the specialties. And if the only solution that that doctor has, or that he's hearing from somebody else, is that he or she has to produce more than that in order to try to find a way to become more profitable, or make more income, and that's the only solution they've been provided. The truth is for most doctors, unless frankly, they're just a producing freak, that we're going to have to break their back to go over that number, or they're going to have to add an extra day of work into their weekly schedule, and the stress is going to be absolutely magnified.

Jason Smith:
And then one of the worst things that can ever happen to one of our clients, and we want to protect them from that, is then the next thing that's coming is burnout, and they're going to shorten their career. And why do you want to shorten a career when you can make a half a million dollars plus a year, even in general dentistry, if you do it the right way.

Casey Heirs:
Yeah, that burnout's a real thing. And if they're they're burned out and the cashflow is poor and they're not making what they want to make, to your point at the end of the careers, they don't love dentistry like they used to, and it doesn't have to be that way.

Jason Smith:
And you will find most people that are doing dentistry because they have to, because they feel the pressure, and they're in a pressure cooker. For example, the person who really doesn't want to go from 1.5 million to 1.8 million, and they're very comfortable and happy at 1.5 million, typically that creates this type of situation that is very much pure misery for the dentist.

Casey Heirs:
Jason, I'm not sure how far you want to get into numbers, but I was reflecting on this and wanted to get your opinion. Let's say a 38 year old, a 48 year old and a 58 year old. Let's take those three places in a career. And if someone calls us, if someone works to make sure the business side of their practice is treated with the same expertise that they proudly treat their clinical acumen, what does that mean net worth at retirement for somebody to not make mistakes and get that side of the practice in order? And in your opinion, if a 38 year old has that realization and they want to retire, say at 60 or at 58 or 59, what's that net worth at retirement look like for the 38 year old, maybe the 48 year old and the 58 year old in terms of stop the bleeding, or improve, and go from great to excellent.

Jason Smith:
There's a couple of ways to look at that, and definitely a good question. But it's very, very rare, that I want to break it down into like a smaller number first, and what are we trying to do every year. And the truth is for pure 401k retirement savings, I'm not talking about what's in a bank account at home. It's just very rare that we see somebody come here that is saving for retirement over $50,000 a year. And then I'll use an example of, for example, one time an oral surgeon called us and said, "Jason, I'm already saving a $100,000 a year." And my comment back to him was, "You should be saving $250,000 a year for retirement." And he actually chuckled and said, "I knew it." And I think the first year with him we did three to $400,000. And certainly that's not everybody, but that was his case.

Jason Smith:
But step one is, the majority of our clients after a couple years, regardless of being general, dentist or specialist, are saving for retirement a $100,000 dollars plus a year, annualized for retirement. So clearly if you're doing that, when you were saving hypothetically $40,000 when you came here, we're going to double your net worth, and double your wealth if we have some time to help you and plan for that. So for example, clearly somebody that comes here at 38 versus 48 or 58, we have more time, so our impact can be larger the younger, we get somebody. But for a 38 year old, we typically like to see them on a path to have 14 to $20 million when they retire, and for a 48 year old, we'd like to see him around $9 million plus, and there's just so many variables that go into there.

Jason Smith:
But the best way I can answer that question is I sure hope we would be in a position to kind of at least double the net worth that they were on the path to have.

Casey Heirs:
I've heard this a few times and I imagine you've heard it dozens and dozens of times, but the practice owner who you mentioned probably doesn't save over 50, it's hard for them. They really, really have to have a focus to save 40, 50, 60, and then we'll talk to people after making that call and after getting things right, and they'll save double and triple what they were saving and their comment is, "Wow, it wasn't near as hard as I thought it would be. It was harder to save that first 30 or 40 than it was to save 140." What do you attribute that to?

Jason Smith:
It's a great question. And funny enough, I kind of indirectly answered that earlier in this conversation, but the truth is the reason they say that, and that's such a compliment to us and our staff works so hard to do that, but it's because they got more efficient. It's because we took it from areas that we'd cleaned up in that practice and we maybe even cleaned up in their taxes and even their home situation, who knows what was going on with their cash flow at home, and we just got them more efficient. It's rare that we are going to take a new client on, and then there's just one massive area that is just such an outlier and kind of a sore thumb sticking out that we're just going to attack and that's just going to fix everything. Unfortunately, it's just not that easy.

Jason Smith:
And typically it's going to come from several areas that need to be cleaned up, and it might be getting better, a couple of percentage points here, a couple of percentage points here, but then when you take everything together, it's such a compounding effect. But a lot of times they say that because of the work we're doing behind the scenes that doesn't require them to do more dentistry.

Casey Heirs:
I love the conversation of a young dentist, or specialist, who we alluded to earlier, has the awareness they need help, they get it, and then they just catapult into greater success. Some so much they're almost embarrassed of the number that they're on track for. Unfortunately, a lot of folks put their head in the sand on the business side of dentistry and they wait and they wait and they wait. And from your perspective, Jason, what is a catalyst or a reason why people end up seeking out help?

Jason Smith:
I think the biggest catalyst is for sure stress and pressure. And a lot of times it can be also a little bit of that stress and pressure with their spouse as well. And those are certainly at the top of the list. And then if I gave you a kind of something that you could more quantifiable, it would be cashflow. Because the solution is never for our clients, now we can't have somebody that does no dentistry, and doesn't produce. There is a certain standard of excellence and a level that we're certainly looking for, as you well know, but it's just very rare to become a multi, multimillionaire, in dentistry, or even the specialties, that in order to do that that you have to be some mega producer. That's just such a fallacy.

Jason Smith:
And a lot of people do not understand that. And then a lot of younger dentists now think you have to own three and four practices and try to compete with a DSO that way. And a lot of these young doctors try to go buy several practices before they even know how to manage a staff. And then they get themselves in real trouble.

Casey Heirs:
That is a great point. We hear that a fair amount. Somebody will say, "I've got a practice and a half or two practices. My goal is five." And when we dig in and ask why, it's usually because they think that's the only path to the financial freedom or financial excellence that they want. And that's simply not true.

Jason Smith:
It almost always comes back to the fact that they're financially not happy.

Casey Heirs:
Yep. And sometimes it takes that unhappy spouse, or the dentist has had enough. And unfortunately it doesn't have to get to that place where those frustrations come. Jason, you've been very generous with your time. If you wanted to tell one last thing to our listeners out there, around this topic, what would that be?

Jason Smith:
One of the last things that I would probably leave people with, which is totally off what we've really talked about today, but before you go buy some big piece of equipment in your practice, or one of the newest tech trends, make sure you do a great analysis on the fact that it's going to fit into your style of dentistry and the type of things that you really like to do, and do some kind of quantifiable study within your practice on how you might even be able to profit off that and how it might impact your taxes, well before you jump in and buy something, so you don't end up with a $200,000 piece of equipment that you put your coat on every day.

Casey Heirs:
Yeah. That's an expensive coat rack. Well, Jason, thank you again for joining us on this podcast. It's an important topic and I'm glad we were able to discuss it today. I think this is a good place to put a bow on this topic and thanks again for joining us and be well.

Jason Smith:
Thanks for having me.

Speaker 1:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you, and your practice, go on over to fourquadrantsadvisory.com, and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.