Do you have slow months in your practice? How about busy ones? Are your spending trends in line with the busier ones? These are the topics we discuss this week…thanks for joining me on this episode of the Business of Dentistry.
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It’s Labor Day weekend here in the U.S., so I’m keeping this episode short. But I’m also talking about the holiday because it relates to our topic today: comparing your practice collection trends or patterns with your purchasing trends or patterns.
To compare these two trends review the historical data you have collected from the time you’ve been in practice. So if you’ve been in business for three years, you can look at the collections per month for three years. Open up your practice management software and see what have you historically been collecting in January, February, March and so on.
Then find out what your average collections are per month across the board for the past three years. I take a look at the past three Januarys, make an average of that data and then I know what we will probably generate in January of next year. I do the same for all of the other months.
When I have that information and I have an idea of what we’re going to collect, then I know the months that will be busiest in my practice. For me those months are March, July, October and December.
I know those months are solid for me, so when I get the average collections for those months I can start looking at my purchasing trends. I want to know when am I buying the most, when am I making my largest purchases per month. I compare that data with the previous data of the months with the largest collections, then I’ll know if these are matching up or not.
We were not, now we’re trying to make those adjustments so we are making our biggest purchases in the months when we have the most collections.
I do so because there is more cash on hand. If I’m making a big purchase I can slide it into the time frame when I have the most cash flow, which reduces my monthly overhead. But I can only do that by looking at the data and knowing my spending trends, collections trends, etc.
Doing so also helps me to set aside cash for bigger purchases that will need to be made in the future. Typically I like to pay cash for things whenever possible, unless it’s a very big ticket item like a $150k CT machine. I would opt for financing versus paying cash on something that costly because I don’t want to deplete my reserves to that extent. But you might, and that’s okay.
The main thing is to evaluate, analyze and plan the way you are making purchases so it works for you and the way you run your business and your practice. This is just how I do it and I’m telling you so you put some thought into how you’re doing this rather than just flying by the seat of your pants.
Another thing I want to talk about is planning ahead for the slower months. I know that September is typically slow for me and every year I tell myself I’m going to do some kind of marketing or advertising to change that and stimulate my practice’s number. Although I say this every year I have yet to do it!
I hope you are better about this then I am, if you have certain months that are slower than others make a plan on how you will handle them.
Maybe you plan your vacation time for those slow months, or you attend conferences like The American Association of Oral Maxillofacial Surgeons has their annual meeting every September because they know we are all slow so we can all attend. You can also condense your schedule in the slow months, or plan a marketing campaign to boost your numbers.
Do whatever you can to balance your collections out across the months to make them as close as possible. This will make your overhead better month per month, which ultimately results in lower overhead and better profitability for your business and practice at the end of the year.
If any of these episodes have helped you in any way, go over to iTunes and leave a review. For those of you who have left reviews, thank you! You’ve helped me on this show and in my practice. I appreciate you and again I thank you for listening and being here on previous episodes, and on today’s edition of Business of Dentistry.