By taking the time to develop your financial intelligence, you will begin to know your business intimately – inside and out.
You’ll be able to understand what’s happening on any given day and make great decisions based on real-time data, which will allow you to change your course appropriately and quickly in response to certain activities that aren’t working.
When you know your numbers, you know your business is on a path of stability and continued growth. So, if you need to up your financial literacy this year, here are five ways to do so.
1. Set a goal
All dental practice owners who successfully scale their businesses start by setting a goal. This goal will be based on your five-year, three-year and 12-month targets. The categories of these goals typically revolve around revenue, ideal lifestyle numbers and time based at work.
2. Create a financial forecast
This plan acts like the roadmap from where you are now to where you want to be. On that journey, it’s important to understand what milestones you need to meet so you know when you’re on course or if you’ve become lost.
3. Determine what to measure and when
For each practice there will be a set of key drivers that dictate performance. Look at what you need to measure and what metrics you need to track on a daily, weekly, monthly, quarterly and annual basis. Do this to establish your financial rhythm and embed this into the culture of your practice.
4. Maximise revenue
There are only three ways to maximise revenue for your practice:
- See more patients.
- Increase the average amount each patient spends.
- Increase the frequency of transactions.
5. Maximise your cash flow
There are six steps when it comes to maximising your cash flow. They are:
- Maximise your revenue (as above).
- Decrease the cost of goods sold.
- Decrease operating expenses.
- Get in any monies owed quickly.
- Push out your payables as far as possible.
- Reduce your inventory or work-in-progress costs. If work is underway, make sure it’s completed in a timely manner and the money is collected.
If you’re looking for more resources on financial intelligence, be sure to check out our podcast episode with Steve Daley of Healthcare Finances. We discuss navigating the financial side of practice ownership and how to create multi-generational wealth.
P.S Want to scale your dental practice and take your profits to 6 and 7 figures?
Me and my team can work with you directly to get you there! Simply book in your FREE 1:1
strategy session, and we can get started on a game plan for you and your practice.