Closing One Year and Starting Another
This week’s blog post concludes a three-part series I began two weeks ago about business leadership and analytics. Part 1 focused on making time to evaluate your business performance for the year end and comparing it with the previous years’. Part 2 shifted to direction: What is the direction of your business? Is it in line with your business goals? Do you need to change course? This final post will focus on business projections.
Final installment in a 3-part series: The Year End
I have found that most dentists dislike taking an introspective look at themselves and/or their businesses. For example, a simple question such as “What do you want?” can be a struggle to answer. On the flip side, it seems easy for dentists to work with numbers and create the financial goals they would like to reach in the upcoming year. I hope you find these three steps painless and easy to follow as you create your business projections for this year and the ones to follow.
Look at your 2017 collections and determine what percentage your business ideally needs to grow in 2018.
Many factors must be evaluated in this first step: Are you a new practice? Did you meet or surpass your goal for the year? Are you adding more producers, or are you cutting back your time?
Create daily goals for each producer.
Once you have established your collection goal, you must determine how much of that collection comes from the doctor schedule and how much comes from the hygiene schedule. Count the number of days each producer works, and divide that by the percent of collection from each department.
Total collection = 1,000,000
25 percent hygiene = 250,000 / 192 (days working in 2018) = 1,302 daily collection goal
75 percent doctor = 750,000 / 192 (days working in 2018) = 3,906 daily collection goal
Make sure you know which days you will be out of the office for holidays and continuing education courses. The number of working days typically is fluid and changes due to inclement weather or any other unexpected leave occurrences.
Create a bonus system.
A bonus for your team should be based off collections. If you know how much business growth you want, create a larger goal for a bonus, and share part of that profit with your team. Let’s say your collection goal is 7 percent of last year’s; create a tier bonus system by calculating what your goal would be if the practice grew by 10 percent, 12 percent, or 15 percent. Make sure you compensate your team members for each tier. While most of our team members may not be driven by money, it is always exciting to get a bonus at the end of the year for surpassing your goal. It can create a challenging and fun atmosphere if it is presented and accepted by your team.
With the growth of dental-management organizations, lack of growth in our economy, and increased level of sophistication we see in our dental patients, we must act like chief executive officers as well as doctors. I have seen too many great clinicians leave our profession due to failing businesses. This is not a trend I wish to see grow. I hope this series of blog posts has helped simplify and organize the business analytics that can help keep your practice thriving.