Beat the Overhead Game

When I see dentists who are feeling pressured by runaway expenses, I find it’s seldom a result of reckless spending. If anything, they’re often too focused on cutting expenses.

Sometimes they’re obsessing over every cotton roll and light bulb, when instead they could be strategizing about the practice’s growth. Their problem is not that they’re spending too much; it’s the way they think about expenses. These dentists are playing the game not to lose, instead of playing to win.

To help you focus your attention where it needs to be you need to look at the equation using a “reverse overheads” formula. This means you start with your current reality – the dollar figure of current expenses – and use your ideal ratio, 55 to 65 percent is a good target range for most practices.

You should work backward to determine what your revenue needs to be to bring those figures in line.

Let’s face it; for the most part expenses are expenses. They are a necessary part of doing business and there is just not that much room for making significant changes. At the other end of the equation – the revenue end – you have much more control and there are no natural limits. In short, it makes much more sense to focus on earning a dollar, rather than saving a dime.

It’s amazing how your perspective changes when you approach things this way. It’s also incredible how much that change of perspective can drive results in the practice. As I often remind clients: What you focus on, works. Reversing overheads puts the focus where it needs to be. Instead of thinking in terms of limits, you’re now planning revenue, which is all about thinking in terms of possibilities; and this is at the very heart of the entrepreneurial spirit.