Barb Stackhouse of More to Life/ Profit First is a hygienist who went into dental education and consulting. She was introduced to the book “Profit First” and began to use the concepts with her clients.
What is “Profit First”? This is additional profit, not the owner’s pay. There is a difference because you are both deliver the service and own the business. You are doing two roles, but you typically are only paying yourself for one of the jobs.
The premise is to use multiple bank accounts for specific uses. Categories include your primary intake account, profit, owner’s pay, taxes, and operating expenses. It’s similar to an envelope system, just digital. It simplifies the process and adds clarity to what funds you have where.
What size emergency reserves should you keep? Do you have overhead insurance and what kinds of things does it cover? It is typically a 90 wait and what does it cover? What would you need to cover in that time? Make sure you have separate savings for yourself personally and one for the business. Both need a minimum of 3 months of expenses. There are places where you can earn a bit more interest such as a money market account, but the initial amount should be liquid for immediate access.
How do we figure out the percentages to use? It is a very individual thing. If you are tempted, you can even put accounts at other banks so it requires more effort. Starting with 1% of profit is a good beginning amount to build your account.
Tips for handling the current stress. Get enough sleep and be cautious of what you are viewing to keep a positive attitude.
When you return to work, it’s okay to adjust your template, but you need to stick to it to be profitable and well structured.
Once you open, set aside a small percentage of your profit to begin building your reserves. Once you have one quarter’s worth saved, you can begin to take half the overage as a profit payment and the other half stays to continue building. You will be amazed at how quickly it grows.
The idea is that the less money you see in the account the less likely you are to spend. The operating expenses account looking leaner will reinforce the behavior to spend what you need.
On a personal level, what does this look like? If you have a goal to pay something off early, set up an account. If you feel you’re overspending in a particular category, make an account so you know when it’s gone you can’t spend any more.
A dentist contacted her recently after being worried about her practice loan, rent, and concern about having to let go of her staff. People are very scared and worried about their situation to the point of desperation.
While we have had a number of years with great growth, we knew that a setback was coming. Now is the time to prepare yourself going forward.
Action steps: You can be profitable no matter how much or how little you have coming in. It is about a mindset shift. Start your savings account and start paying yourself. Take some time for self-reflection and know your value. Dentists tend to think linearly, so apply the steps in order and you will find success.
How do we get ahold of you? www.moretolife.dental and find a link to both her webinar and the first few chapters of “Profit First”. Make sure to let her know you heard about her from this interview.
The Nifty Thrifty Dentists
Dr. Glenn Vo and Dr. Vinh Nguyen are the original "Odd Couple" of Dentistry - they are neither partners in practice or in bed. Just the dynamic duo behind one of the most entertaining Dental Podcasts in the World. Let's face it. Being a Dental Professional is hard. Heck, life in general is hard. Leave reality for a moment and join us in this podcast whirlwind of interesting guests, funny jokes, and thought provoking banter.