Dentaltown August 2021 - 10

howard speaks
column
Where Are Your Profi ts Going?
How should you be spending the money that you're
earning in your dental practice? The right answer to
that question will vary according to your particular
personal and professional situation, so making the right
choice requires taking a deep inventory of where you
and your practice are today-and where you hope to
be in the future.
How you allocate your capital is not only the most
important business decision you'll ever make, it's also the
most important fi nancial life decision you'll ever make.
Keeping it in the business
Dentists usually dedicate lots of dollars to retained
earnings-net income profi t dollars that are reinvested
into the dental practice. This makes sense, because
keeping your practice up to date and timely is a necessity
in today's competitive age. A few situations where this
would be a smart decision:
* Is it time to expand your offi ce and add another
operatory, so you've always got the room to
accept emergency dental patients who, if you
can't treat them right away, will go down the
street to another dentist who can?
* Would a CBCT machine help you place implants
more effectively?
* Have you upgraded to intraoral scanners, instead
of relying solely on physical impressions?
* Could you benefi t from a comprehensive
series of CE courses to improve your adult
minimal oral sedation skills? [Editor's note:
We just added a 19.5-credit series by Drs. Mark
Donaldson and Jason H. Goodchild to
Dentaltown's online CE lineup.
To learn more about the 10-course
series, hold the camera of your
smart device over the QR code in
the box at right.]
* When's the last time you updated
your website and the photography
on it?
Choosing outside interests
Retained earnings stay in the practice, and aren't
paid out as income. Some doctors prefer to extract their
earnings, though-like a wisdom tooth!-and redeploy
them elsewhere. Maybe they believe that instead of
taking $1 of profi t and deploying it into their practice,
it's more likely to turn into $2 of capital value creation
if they invest it in real estate, stocks and bonds, another
business, or other categories. (And sometimes it's just
a case of deserving a treat like a new car, boat or a
well-deserved vacation!)
More practically, debt reduction will always be a
great choice because there's a certainty involved: If you
pay off an interest-bearing credit card, for example, it's
guaranteed that you won't be paying that 18% APR
on the balance. Meanwhile, the inverse is not true
of stocks-there's no guarantee you'll make an 18%
profi t on your investment, and in fact there's a chance
you could lose money. Investments involve risk, which
requires you to take a good look at your specifi c situation
and how comfortable you are playing the odds involved.
But eventually, you will need an exit strategy from
working with your hands all day to having your money
work for you, and that will likely involve investments.
Luckily, over the long run, having a portfolio you can
retire and live off is very likely, given the typical dentist's
income and the miracle of compound interest. Not only
does the money make money, but the money the money
makes makes even more money, so you can do other
things with your time than drilling, fi lling and billing.
So watch how you allocate your capital! Investment
guru Warren Buffett calls it the most important decision
you make in business, and it's up to you to determine the
smartest direction for your particular practice path. ■
SCAN THIS CODE
to see more about our
19.5-credit CE series on
adult minimal sedation.
by Howard Farran, DDS, MBA, publisher, Dentaltown magazine
10 AUGUST 2021 // dentaltown.com
https://www.dentaltown.com/onlinece/series/33/mastering-adult-minimal-oral-sedation http://www.dentaltown.com
Dentaltown August 2021

Table of Contents for the Digital Edition of Dentaltown August 2021
