Strategic Finance for Dental Practices – What to Know

Although numerous obstacles have been faced, many dentists viewed the pandemic as an opportunity to implement long-term improvements to their practices and plan. 

Here, we will examine various strategic paths for your practice that new dentists can apply to mid-career professionals to those nearing retirement.

Understanding Current State

1. Economy

It is essential for any business, including a dental practice, to have a clear understanding of the current state of the economy. Prices for goods and services have been rising since the early 1980s. 

This suggests that the cost of living for your customers and employees has significantly increased. Your retirement savings and withdrawal strategy will be substantially affected by rising inflation. Failing to account for inflation in your practice and retirement planning properly, you risk undervaluing yourself and the patients who keep your practice afloat.

2. Financial Protection

Social Security, retirement savings, and personal savings are the factors of retirement planning, according to financial planners. No matter what combination of these three factors you rely on for retirement income, starting planning early and making regular contributions to your accounts is essential. The earlier you start saving, the more time your money has to grow.

3. Dental Market

Dental practices must keep up with the latest trends to remain competitive. In addition, dental procedures must consider the demographic needs of their patients to stay ahead of the curve. By understanding the dental market, dental practices can make informed decisions about their future.

For Start-Up Practitioners

When discussing long-term planning with young dentists and practice owners, they often say they just started their business with unpaid student loans. Long-term planning will be more straightforward the earlier you begin your dental career.

Prioritizing student loan debt reduction over retirement savings may have adverse long-term effects. Doing otherwise would have a higher return on investment, like spending money on new equipment or tools to deliver better patient care, which can pay off handsomely in the long run.

For Mid-Career Practitioners

It might be time to think about your eventual succession and exit strategy if you are in the middle of your dental career and considering your next moves. Due to this, a solo practitioner’s patient care team may need to include a dental assistant. 

Aside from having a potential successor for retirement, having extra hands has many advantages. Increased output and patient assistance during paid time off are two examples.

For Retiring Practitioners

Now is the time to get ready for a smooth transition if your dental career is about to end or you’re thinking about doing something else. Your investment in your dental practice might be the biggest one you’ve ever made, and it has its own set of advantages and risks.  

A thorough comprehension of the worth and advantages of your expanding practice should serve as the foundation for personal investment decisions and financial planning. Your valuation should help you plan for the unexpected by telling the whole story of your practice’s value, including the cash flow picture and the value of the underlying assets.

Conclusion

You should be aware that there is no one-size-fits-all approach to planning and pondering your next steps if you are one of the many people doing so. Regardless of where you are in the practice’s life cycle, you have several options to help you decide what to do next. 

Ash Dental CPA is a dental accounting firm that can assist dental professionals in managing their wealth to coordinate their plans best. Our wealth management service is tailored to each dentist’s needs. Contact us now!