Warning! This is a list to stimulate your brain about the upcoming year. It's not to initiate guilt after the Holidays. Take a quick look now. Then come back in a week and pick several goals for 2011. Trustworthy financial arrows point up for the coming year!
Practice Management A dentist client in Northern California accomplished the following in 2010: 1. Reduced her front desk payroll by 60% by eliminating her office manager's position. Now two team members operate more efficiently than three did before. 2. Set up block scheduling. Now she can preserve her productive time. 3. Refined her Practice Vision and printed multiple copies to place around the office. Now all personnel are on board. 4. Eliminated a PPO plan that overwhelmed hygiene and generated almost zero production for the doctor. 5. Started taking Wednesday afternoons off. In January 2011, she will eliminate all Wednesday afternoons. 6. Instituted Morning Huddles, with resultant better control of the day. 7. Instituted regular Staff Meetings with timetabled "to do" lists. 8. Reduced Accounts Receivable to near one month's production from an original 2.5 month's. 9. Was able to save 15% of net income (her goal for 2010), even while paying off a practice loan over $800,000.
I'm not encouraging all of you to do this entire list, yet to have several updates to your management is important. Pick a couple and engage staff at your first chance in 2011. Also, plan your CE trips and courses for the year now. The best classes fill up early.
Practice Finance - Update fees: January is the time for your fee schedule update. Many docs with PPOs and HMOs have multiple fee schedules. Please take the time to update them all. This is the most important item listed in this article! To wait thee months will decrease the average practitioner's net annual income by $6,000.
- Plan for any new equipment purchases for 2011.
- Plan for any office upgrades such as computer upgrades or new carpet.
Budget the above. How much can you spend next year? Brian Hufford says to keep all personal and business purchases to 5% of your total production. Realistically, most practices keep in the $20K range unless the equipment can demonstrate an immediate positive return on investment.
- Plan for staffing evaluation in 2011. Does someone not embrace your vision?
Personal Finance Major Expenditures: Talk to your spouse about the big-ticket items you plan for 2011: · Vacations: summer, winter, and weekends away.
· Special Events such as weddings, special anniversaries.
· New vehicles to purchase and any new home to buy. Rebalance: January is a great time to have you or your financial adviser rebalance your portfolio. If you invest on your own and need help rebalancing, I can assist for little or no charge. Call me at 760-535-1621. Taxes: Note that I didn't harp about tax strategies like everyone else does before the end of the year. Big mistakes can be made with a hurried attitude. Carlsen Rule: I have never heard any dental financial adviser mention this, yet CPAs and tax attorneys are adamant: The total you are able to save each year is much more important than how much is tax-deferred. Please don't get trapped into the idea that if you can't deduct savings, it isn't worth doing. As I've hammered home before, all the early retirees I know made their fortunes on after-tax investments, not tax-deferred. That said, it is best to save in a tax-deferred environment, as long as fees and employee expenses don't eat up all your gains. Doctors today can easily deduct up to $49,000 ($54,500 if over 50) with simple, inexpensive 401(k)s or SEP-IRAs. Yes, there are more exotic flavors of tax deductibility, almost all with heavy fees. Please remember the following: The 70% Rule: If you, the doctor, are not receiving 70% or more of the benefits of a retirement plan after subtracting out fees and employee contributions, then it rarely makes sense to have that plan.
Make sure you work with a large national firm, such as Vanguard or Fidelity, a CFP, a CPA, or a tax attorney. Insurance companies, such as AXA Equitable, even with the ADA's approval, rarely provide proper guidance.
Beware of the large dental consulting firms. Make sure your CPA or tax attorney agrees to any retirement plan. In my entire career (1979-2004) I never offered a pension benefit for employees, as my percentage of benefit was always less than 60%.
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