Dividing up the Dental Office Income – Part III of doing your Numbers

Over the past three Fridays I have been discussing my later in life realisation on how easily and simply you can divide up and appropriate the dental office’s income or billings.

This simple division helps your office to run and grow in a sustainable manner without getting too top heavy in one section of expenses or drawings.

I discussed firstly that the principal dentist, like the assistant dentist, should draw a personal 40% dental draw for his efforts.

I also discussed how there is a 20% amount for the practice owners to reinvest in the business or draw down in part or full, as a dividend, as they see fit.

This leaves a round figure of 40% of the practice income for the payment of the day-to-day dental office expenses.

This 40% in practices can be simply divided in half. The first half, or 20% of the total dental office income, should be invested in staff salaries, benefits, and bonuses. One in every five dollars coming into the dental office needs to be remunerated to the team, and they need to know this. That’s twenty cents in every dollar of practice income!

As the turnover of the office increases, then the office can either pay bonuses or increased wages to the team as reward for effort contributed in building the dental practice. Or, as the workload increases with the increased patients and billings received, then additional staff members can be employed, and funded from this ratio.

I like to think that hygienist salaries or their base salaries can be appropriated out of this 20%.

The other half, or the last 20% left of the dental office billings goes toward paying all of the other office incidentals, which incidentally aren’t that many in number.

Rent, utilities, insurances, and stock and materials. Marketing and advertising too. Laboratory expenses are already allocated in the dental draw of the dentists, traditionally. So too would be dental education of the doctors. However, team education would come out of the staff 20%…

If you look at these ratios, they make simple sense in running and maintaining a very well balanced business with happy employees and owners. If you find that there is unhappiness, in any level, then take a look at the balances and proportions…you’ll find that one of the percentages is usually, or unusually skewwhiff. Get the ratios back on track, and watch your business and your enjoyment of dentistry soar.

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