Sarah Kersting

Sarah Kersting

eAssist Chief Marketing Officer

Expense Expectations: What’s it Worth to You?

Expenses can be some of the most daunting things we face as business owners. Profit and expenses go hand in hand, sometimes not for the better. It takes skilled management of both time and finances in order to profit from your business, and if you’re running a dental practice, this is all the more important.

Dental office overhead statistics show that nearly 75% of a practice’s finances go towards overhead. That’s including an average 15% marketing budget, staffing costs nearing 30%, and inventory. If your numbers are a bit off of these averages, you shouldn’t worry, but if you don’t know them, you might be in trouble. A few things to keep in mind when you first crack open your books:

  • Forecast your yearly pre-tax revenue by utilizing past receipts and accounting statements.
  • Start off with monthly goals when you first start managing finances, then graduate to quarterly and yearly processes.
  • Review your expenses whenever you can, or have your accountant do it for you. Be sure to let them know exactly what you expect in terms of your set financial goals for the practice.

Dental practice cost structure is variable relative to the type of practice you own, yet utilizing national averages can be extremely helpful in determining what kind of expectations you have for the future.

Expense benchmarks should be a part of the end goal that you want to see. Cutting lab costs by purchasing your own equipment or hiring your own licensed technician? Note it and track these cost cutting measures to make sure that you’re getting the full benefit, over a quarter and through the calendar year. Here are some other things to consider throughout your personal auditing period:

  • Inventory management should be specialized per department (ie: front office, lab) and clear so that there are no questions about what you have on hand.
  • If you’re renting a commercial property, what does rent and applicable taxes look like each month/year? Do you have a variable contract that can sudden sink your profitability plans? Look into any agreements and make sure you are getting the full value of your practice space each month.
  • Salary costs are another inevitable expense that you can still manage and keep track of. Your specialized dentists and hygienists should be getting slightly more than your assistants (think 10% versus 5-7% of costs average), yet their value to your business is the same.

Remember, you choose your overhead! Maybe you need more marketing budget to get started or to continue growing. Perhaps inventory can be cut down by purchasing bigger orders rather than many small ones. There is always an exception to a rule in overhead, so choose what fits best for your practice and watch the results. Share the good news of meeting goals with your employees; they helped you get here! Plus, there’s nothing like more motivation towards making your practice run smoother and more profitably.


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