‘You can only manage what you can measure’ is a useful mantra for dental practice owners. If you want to take your business to the next level, you need a solid grip on past financials to make good decisions going forward.
This means having accurate tools to gather all the relevant data you need. The most efficient way of gaining a thorough knowledge of your performance is to integrate a practice management system with a bookkeeping one.
A practice management platform will keep track of patient income, for example, how much a certain group of patients brings in on a daily, weekly and monthly basis. It will also report on new patients, and how much potential income value they have over any given period. From this, you should be able to identify what your most ‘profitable’ patients are, so you can develop this part of your service. Your practice management system will also show you patient conversion rates as a % so you can see how your sales process is working.
Your bookkeeping system will report on income; direct costs; gross profit; net profit; overheads and will be where you log your banking/receipts. Use this data to see how the practice performs month on month and compare how well it does from one period to another. You will also be able to calculate gross profit % and net profit % from these figures.
This sounds time-consuming, but there is software out there to help busy practice owners stay on top with minimal fuss. Specialist medical and dental accountants Lansdell & Rose provide a bookkeeping system called Xero free to its clients. Extracting the right information is easy when everything is in one place and you may find that developing an in-depth knowledge of how the business operates is enjoyable as well as enlightening.
You may be grateful that your practice is ticking along nicely, but there will be a time when you want to move things up a notch. The face of dentistry in the UK is changing and you want to be in a strong position to make the most of a growing patient base with high expectations. You cannot grow in the future if you do not understand how your business has operated in the past – knowledge is power and will help you to succeed ahead of the competition.
Visit www.lansdellrose.co.uk or call 020 7376 9333.