In these unusual times, it has never been more important for a dental practice (or any business) to have a handle on their fixed costs. Cliff Fleming offers a masterclass.
In these unusual times, it has never been more important for a dental practice (or any business) to have a handle on their fixed costs. I am sure that you are not one of those practice principals who just remunerates yourself with what is left in the practice bank account at the end of the month!?
Now, more than ever, you need the figures at your fingertips, specialist advice and the long-term in your sights.
So, how do you plan this effectively?
1. Ascertain your fixed costs
Ascertaining your fixed cost base enables you to see the gross fees you need to cover it. As well as the number of patients you need to see.
Remember, while you are an asset to the business, you are also a cost!
2. Project your likely income going forward against the fixed cost base
By projecting your likely income, you will then start to see the likely shortfalls (or, unlikely at present but possible, surpluses) in cash flow.
You can then make plans on how you can deal with these.
3. How will you shape your business to fit?
At this point, you need to find out what you must do to allow the business to survive any issues.
You will need to ‘wield the axe’ and make what will perhaps be uncomfortable cuts in your own personal expenditure and reduce overheads wherever possible. This could involve staff redundancies.
4. How much cash will you need?
How deep and long-term are any of the shortfalls?
It may well be that you will need to speak to your bank to arrange overdraft facilities or loans.
There may also be appropriate government grants or loans on offer too. Always ensure that you take expert advice.
5. When will NHS funding stop?
The honest answer is that, like so much COVID-19 related, we do not know the answer to that question for certain.
But, fail to prepare and prepare to fail. You should prepare budgets and forecasts to see what the new shape will be.
6. Do you have an idea of what your ‘new normal’ will look like?
It is a good idea to take a step back and think of your practice as a business starting all over again. So much has changed that it is the simplest way.
Document what you think this ‘new’ business will look like and what it needs to survive.
Although this pandemic is unprecedented in recent times, human history tends to suggest that we will get through it and carry on.
Make sure that you take the steps to safeguard your practice so that you can ride these stormy times out.