As the practice leader, you need to track your overhead and production numbers. As the CEO of your practice, it's up to you to know how your practice is progressing toward its profitability goals. To create a viable budget, analyze past performance and evaluate how it relates to your practice's potential.
Follow the money. The simplest approach to making a budget is to analyze how the practice is spending money. Evaluate where revenues come from and where they go. Track all of the practice's collections and expenditures using practice management or accounting software. Adjust line items to reduce waste and increase profit to finalize the budget -- and then stick to it!
Don't forget to control spending impulses. You may be tempted to buy the latest equipment, but you should exercise fiscal discipline. Evaluate new technologies carefully, not only to determine if they'll benefit patients somehow but to calculate how long it will take to break even on the investment. If it's not in your current budget, put it in your spending plan for the next year.
Dr. Roger P. Levin is CEO of Levin Group, a leading practice management and marketing consulting firm. To contact him or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit LevinGroup.com or email [email protected].
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
