By Simon Hocken, Lead Coach: Business, Practice & Clinical Leadership
After my piece in the last Breathe ezine, “How Much Do Dentists Earn and Why?” several readers contacted me to remind me that their profits are far more important to them than the gross fees their businesses achieve!
For example, Steve Jones from Pentangle Transformations commented that,
“I really enjoyed your ‘earnings’ article – right on the money. One area your article did not go into was the profitability issue. I’ll bet none of your guys are taking more than 50%, which always amazes the little guys.
Also the inability of the Implant/Cerec/Full Mouth/Charismatic Dentist to fashion Associates in their own image is also fascinating… So the practice is geared to earn a lot/spend a lot but the other bods in the building remain earning a little/spending a lot – not good.”
Steve’s right of course, I meet many high grossing practices that have ramped up their costs so that the profit remains stubbornly low. Just recently, I came across two practices:
- A practice (with three partners) where the gross is, £1.1 million and the profit? Just over £200k shared between them…
- A practice with two partners where the gross is, £500k and the profit? £220k shared between them…
So, for Steve and the rest of our readers, Steve’s right; not many practice owners manage to take home 50% of their own gross and certainly not ever 50% of the practice gross.
The net profit (that is as a percentage of gross practice fees) within the 35-50 practices we currently work with ranges from: 18% to 43% of gross practice fees.
• General practices average 22-43% net profit.
• Orthodontic practices average 28-38% net profit.
• Advanced Restorative Practices average 18-23% net profit.
I know you’ve heard me say this many times before, but nearly all the dental practice data that we see at Breathe demonstrates that practice profits are far more sensitive to their gross fees than their costs. So, Steve Jones’ comment about the principal grossing better than the associates is a very common suppressor of practice profits.
If you would like to know how to:
1. Increase your profits
2. Increase your associate’s gross
Please contact me directly on:
t. 07770 430576