It used to be that dental practices grew over time through word-of-mouth recommendations. The growth was usually organic, which means that businesses were more inclined to last in the industry for a long time. But today, attracting clients, patients, and customers has never been as hard. Aside from attracting customers, dental practices are also challenged by the sprouting of many other dental clinics and the expensive overhead costs caused largely by rental fees and wages.
If you talk to accountants for dentists, you’ll realize how much overhead costs dental practices are wasting every month. Things such as rental fees, wages, supplies, equipment, and utilities can be reduced to give the profit a boost. Even a small adjustment in the monthly fees can do big for a dental practice.
Imagine a dental practice that makes a gross income of $1 million a year. On average, 75% of that goes to overhead costs, which means that you’ll be left with a profit of $250,000. But what if you can reduce your overhead by 5%? That amounts to $50,000. An additional $50,000 on top of your $75,000 profit will do so much for your dental practice.
Determining If You Have a Large Overhead
Your accountant should be able to provide you with a list of your expenses. Check out which of these items can be reduced. Can you reduce your electricity costs? You can switch to eco-friendly lights. How about the rent? What can you do about it?
Identifying the items that are costing your dental practice is the first step toward reducing your business overhead. This way, you can make the necessary adjustments that will improve your dental practice’s profit. Estimate in percentage the amount you spend on each item. This will help you see better which of these are drying up your coffers.
What Can You Do to Reduce Overhead and Improve Profit?
In a perfect world, all you have to do is to attract more patient so that you’ll have more money. You’ll depend on the volume of patients your clinic have. But you don’t live in a perfect world. It’s messy and chaotic. You’ve got competitors left and right. You need to reduce your overhead now if you want to survive in this industry for a long time.
Encourage Patients to Leave Reviews
Encouraging patients to leave reviews and recommendations about your clinic will attract their network. They’ll bring new patients to your clinic, which means that there will be more sources of income for your business. This is a digital word-of-mouth recommendation that dentists have been so used to.
Get better deals from your suppliers. Try to find suppliers that can give you better offers on the supplies that your clinic needs. If you’ve been with one supplier for a long time, it’s time for them to give you a discount on the number of orders you place each month.
Renegotiate Your Lease
Do you really need that much space in your clinic? Maybe you can renegotiate the terms of your lease. You can transfer to another unit in the same building if it’s cheaper than the unit you’re occupying.
Review Your Insurance Coverage
There may be potential savings in your insurance premiums. Review your insurance. Do you need all these kinds of coverages? Check out other offers, too. There are a lot of insurance companies now offering better and more affordable policies.
With these tips, you can reduce your overhead in no time. In turn, you’ll have more money to improve your facilities and save up for expansion plans. You can even divide the amount you’re going to save so that you can give your employees a raise.