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In this kickoff episode of a brand-new series, host Wes Read shares the foundation of financial planning tailored specifically for dental practice owners. Drawing from his widely presented talk, Dental Financial Planning: Turning Chaos into Financial Freedom, Wes explains why every dentist—regardless of age—should have a personal financial plan. He discusses the importance of building a roadmap for your future, even if life takes unexpected turns, and outlines how thoughtful planning today leads to financial independence tomorrow.
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Transcript:
Wes Read: [00:00:00] Hey, welcome everybody to another episode of the Dental Boardroom podcast. So it's Wes Reed, as usual, coming at you as our main host here at Practice, CFO of the Dental Boardroom podcast. I've got a series that I'm launching, this being the first of the series. I have done at this point about 110 episodes, and during that period of time, on occasion, I will do a series of podcasts that all relate to a given topic.
I did a series on partnerships, so if you're in a partnership or considering one, listen to that one. That was, I think about 20 episodes ago or so, I think in the eighties or 90 episodes. And then I also did a recent series on AI and dentistry. Interviewed some of the CEOs, some of the leading AI companies as well, and I hope that was informative as we're all trying to figure out.
What is this thing called [00:01:00] AI and how's it going to affect your business today? But even more importantly, how is it gonna play a role in your business 2, 3, 4 years down the road and how do you use it to your advantage and not get left behind? Alright, so the new series I'm rolling out is on a common speaking engagement.
I do both webinar in person. I've done it probably 15 times, different dental societies, study clubs, and the California Dental Association as well. And it is on the subject what we do here at Practice CFO every day, which is financial planning for dentists or the title of this, this speaking engagement that I do.
It's called Dental Financial Planning, turning Chaos into Financial Freedom. And if your client of practice CFO is, many of you listeners are. You know that we have one primary overriding [00:02:00] goal, and that goal is to accelerate the day at which you are independent financially, which means that you could stop working for money because you have assets that generate sufficient income to cover your spending needs for the rest of your life.
Given fairly conservative assumptions around inflation and rates of return, there's a lot of factors that go into doing a good retirement plan, a good financial plan, because you have to forecast out your life, and this is one of the reasons why I think everybody should have a personal financial plan.
Now, the reality is that. Doesn't matter if you're 30 years old or my age at 46 years old, or if you're 60 years old when you try to plan for 5, 10, 15, 20 years down the road. In so many ways, we're just making our best forecast of what life is [00:03:00] gonna be and what we want it to look like. And one thing is for sure your financial plan will always result in something different or better said, your life will evolve in a way that is different than what you have in your financial plan.
Alright, now that I got that outta the way, I do want to endorse doing financial planning, even though it is not going to unfold exactly as you would want or predict in your financial plan, which again, is a bit of a subset of life planning. They're very integrated life planning and financial planning because the dollar or money has a significant role to play in the life that we're.
Going after. Even if you have a very simple life, you still still need resources to cover yourself. So I do wanna endorse financial planning even though there's a lot of uncertainties and changes in our life, changes in the world that are not predictable. By sitting down and going through an intentional exercise of forecasting yourself [00:04:00] in the future is extremely valuable to help you make prudent disciplined decisions today.
And then even though the world's gonna change and even though your financial plan isn't gonna evolve exactly how maybe we would intend it to be, the fact that you thought about your future and your life and you correlated back to today to make decisions today, I promise you, you will be in a better off.
Situation later because of those decisions. Even if you don't end up exactly where you thought you were going to be. One of Stephen Covey's, the great author of Seven Habits of Highly Affected People, one of his analogies is you don't wanna work so hard climbing up a ladder only to find out you're the end of your life that you ended up on the wrong roof and you're looking across the horizon and you're seeing other buildings, and you're saying, that is actually where I wanted to be.
In other words, don't bark up the wrong [00:05:00] tree. Good financial plan will help you plan accordingly to make wise decisions around which building or which tree you are climbing up. So I do this, uh, I do this series called Dental Financial Planning, turning Chaos into Financial Freedom because finances can feel a lot like chaos in our lives.
Very chaotic, especially as a business owner. I suspect if you counted all of your checking accounts and credit card accounts and all your investment accounts, your 5 29 education accounts, your IRAs, your Roth IRAs, your four oh K, maybe you're a little older and you got a defined benefit plan, brokerage accounts, you got various debts, you got checking accounts, credit card accounts, the list goes on.
It's a lot of elements in that financial ecosystem known as your life, as your financial life, and di good financial planning, particularly financial planning that understands the nuances of a dental practice owner. Because [00:06:00] trust me, there are a lot of nuances that a general financial planner is not gonna understand when it comes to dental financial planning because your practice is the heart of your cash flow.
And it is not a big C corporation where you're paid as an employee. You take home what you produce out of this machine that you bought or built and you manage with the use of other people, tools, education, consultants, yada yada, that you're trying to generate out of that a healthy surplus to feed your personal balance sheet.
And that personal balance sheet then is what will feed you in the future. So good financial planning is gonna do two things. It's going to organize the financial ecosystem inside of the heart of your cash flow, which is your business. It's gonna organize that so you grow it well. Now a financial planner isn't a practice management consultant, so they're not gonna try to help you grow your collections necessarily.
And we here at Practice CFO, offer some recommendations and do get a little bit into what [00:07:00] we call top line planning or revenue planning to get collections up. But by and large, a financial planner says, what do we do once the dollar hits your bank account? What do we do? It's marketing people and practice management consultants and maybe leadership coaches.
Those kind of people help you get your collections up. A good financial planner will say, okay, how do we help you keep the dollars that do come in your bank account and then send them off to either take care of your personal spending needs today and or your spending needs in the future IE into your savings accounts or maybe paying down debt.
I really want to clarify that, that when you build your wealth, you have this thing, we all have this thing everybody does. Even if you're homeless, you still have this thing called a personal balance sheet and the personal balance sheet lists or itemizes out everything that you own, and it also itemizes out everything that you owe, [00:08:00] which is debt, so your assets or everything that you owe that you could res.
So something that probably isn't an asset is an old set of golf clubs that essentially you'd have to give away to Goodwill. That's not an asset, but if you have a brand new set of golf clubs, theoretically, that you could go sell for a couple thousand bucks, alright? Now it starts to become an asset. So assets are things that you own that have a value to them that are generating income, or you could sell them for income.
Those are assets and we all have them in our personal life, on our personal balance sheet. And sometimes you'll hear termed your net worth statement, which shows all of your assets and all your liabilities or everything that you own and everything that you owe. And the difference between those two is called your net worth.
Now, a business has this thing called we all hear, I've just mentioned it. They have balance sheets, and you hear that term balance sheet in the context of a business. You usually don't hear that term in the context of your personal life, [00:09:00] your yourself, but the reality is you do because all a balance sheet.
Displays is, as I said, all of the things that you own and all the things that you owe, all. So all of your assets and all of your debt. And the difference is what is sort of the value of the worth and in a business that, that's called your equity. And so you have your assets, you have your liabilities and your have your equity.
And if you take your assets, everything that you own, you subtract at your liabilities, everything that you owe, whatever's left is called your equity. And you can literally look on your balance sheet that you get from your bookkeeper or account and it will say, here is your owner's equity. Now, a lot of people look at that on their business and they'll say, oh, is that what my business is worth?
The assets less, the liabilities is the equity. Is that what I would go sell it for? The answer is no. The answer is no. You would sell, you would sell it for whatever a willing buyer will pay for your dental practice. So the equity on your balance sheet is called your book equity. And the book equity is simply everything you bought.
So there's [00:10:00] dental chairs, the all the equipment, x-ray machines, CAD cam leasehold improvements when you did renovations in your building, all of that stuff that you bought that isn't an expense like cotton balls, but stuff that is is valuable and that will pro provide value to over a long period of time and much of which you could resell potentially.
Those are all called your, your assets. Now, if you bought your practice, you got this intangible asset called goodwill. Usually most of the purchase price of a dental practice goes to Goodwill. You're buying the reputation and the intangible, uh, brand of that practice. And that's usually the biggest asset on the balance sheet.
So if you take all those assets and then you subtract out the debt that you owe on your credit card and your bank loans, now you get what's called your accounting equity or book equity. And that is, that's a, that's more of a tax number, a little bit more than anything. It doesn't indicate what you could sell it for.
'cause if you then grow your practice through just being a great [00:11:00] business owner, building a great brand, you may buy your practice for a million bucks and then you can turn around and sell it for 2 million bucks. Your book equity may only be $500,000 on that, but then you go out and you sell it for $2 million.
So the real equity of your practice, the real value, the real equity you could extract out in a sale is going to be in virtually every case, maybe not every case, most cases. It is going to be higher than the book equity on your balance sheet. Alright, now let's pivot this over to your personal balance sheet.
In your personal balance sheet, you're not gonna have dental chairs and x-ray machines. You're gonna have IRA accounts, you're gonna have your house, you're gonna have, maybe you could put some cars on there if they're not old and essentially worthless. You might have 401k uh balances on there. Brokerage account balances.
Maybe you have a crypto wallet on a Bitcoin or two. All that stuff goes on your personal balance sheet. And then also on your personal balance sheet is your [00:12:00] personal debt, car loans, home loans. If you have leveraged investments, maybe you borrow at Charles Schwab to be able to invest more. That's risky.
But all of that is debt that would go on your personal balance sheet and. The difference between everything you own on your personal balance sheet and everything you, you owe. So all that debt is called your net worth. That's called your net worth. So your personal equity, your personal equity is what we call your, your net worth and net worth.
I've said it many times, I'll say it again. Net worth ain't your self worth because money doesn't make us happy. Money can support our happiness if we have a healthy relationship with our money. And that's what I'm all about. That's what practice CFO is all about, is how do we help you create an ecosystem and a set of processes, a financial processes that [00:13:00] help you produce as much and keep as much of your hard earned money as you can.
And then how do you allocate or attach to that money? You've been building up through savings and other assets. How do you attach to that wealth? Meaning will you do that by having a game plan with your life? What do you want accomplish that has a price tag to it? That set of thoughts that, that mental exercise.
So two things that that infrastructure of financial processes in the practice and then as it flows out to you personally, is the first part of good financial planning. The second part of financial planning is attaching meaning to the money and the wealth once it's out and sitting on your personal balance sheet.
So that brings you joy in your life. It strengthens relationships in your life. It enhances opportunity for you, for your partner, for your kids. That is what a great financial planning process looks like. Now the problem is, the problem [00:14:00] is, is that when you go out in the marketplace and you look for financial planners, I.
This is one of those things where it's like my, my colleagues out there who are financial planners, I'm a certified financial planner and a CPA, but you know, I go out to a, a financial planning conference. I just went to one in San Francisco last month and, uh, get together with a lot of these great, wonderful people.
But I look at a lot of their business models. I say, we talk about, okay, how are you compensated? How do you make money as a financial planner? So many of them make money by selling you a product. They wanna sell you an annuity. They wanna sell you insurance. Now, don't get me wrong, I personally place life in disability insurance, but I virtually almost always, always only do what is needed to meet goals.
And I almost never do cash value life insurance. And there will be a lot of life insurance people who will argue with me all day long and send me packets of papers proving how life insurance, cash value, life insurance, where you invest inside of the insurance policy is this great mechanism for [00:15:00] tax deferral, blah, blah, blah.
If you really read the books and people have left financial planning industry and give you the inside story. Telling you the main reason they sell cash value life insurance is because it makes massive amounts of money for 'em. The commissions on those things are astronomically high. That's why they sell it.
They don't wanna sell you term life insurance. Nobody makes money off term life insurance salespeople. I don't. I sell it because my clients need it is if one thing that I get a, a commission on is life and disability insurance, because that's the only way that the insurance compensates financial planners who take the time to do the analysis of what amount of insurance do you need for disability in life and where can you get that at the lowest cost.
You know, that's a process. And so an advisor should be paid for that kind of thing as long as they're compensated for your best interest. That's called a fiduciary duty. If that's the case, then you're probably gonna be safe. But a lot of financial planners stay away from the fiduciary [00:16:00] responsibility, the fiduciary duty, 'cause that could hold them liable if they give you advice that goes south.
And that's why I am a big believer in getting really fee only advice where you're paying for the advice, you're not paying for the product. And the product coming out of it will be a function of good advice. And it'll be a function of a good process of analysis to understand your life and your goals and your financial context to then surface a product like an, I don't know, an index fund inside of your 401k or a term life insurance to cover your family independence if you passed away.
Those kinds of things should only be the result of independent objective planning. And so out there in the world, a lot of people who will come and say, Hey, I'm I, I wanna be your financial planner. What they're trying to do is get you on this road that leads to a product where they get a good commission.
The biggest commission, all roads lead to that. So if a, if, um, if a licensed insurance person comes to you and they make all of their money off of [00:17:00] selling life insurance. They'll tell you that they'll do a retirement plan and all this stuff, but at the end of the day, all roads lead to the thing that pays them money and that is commissions.
And so I'm a big fan of fee only advisory work where the advisor is paid for the fee. Now, the problem is, is a lot of people struggle to be willing to pay for objective advice. It's easy to pay for the insurance if you're not paying the advisor other than just paying premiums on that insurance. But the way you gotta think about that with that cash value life insurance is you're paying a hefty premium for many, many years, decades.
And those hefty premiums is what compensates that advisor. So if you didn't pay that advisor for their independent objective financial planning process. That advisor is gonna get paid on the backend through a stream of premiums that go on for years. [00:18:00] And so they're gonna lead you to the waters of a large cash value life insurance because that is what makes them money.
Now we all need to live and we all need money. And I don't wanna, I don't wanna complain to anybody about that, that significantly exceed. What is that extra incremental cost you're paying to get the pay for advice, not pay for the product? So we do, uh, for our clients, we manage a little over 400 million at practice, CFO, a lot of 4 0 1 Ks.
A lot of defined benefit plans. IRS brokerage accounts, we manage quite a bit of assets. We don't get paid by any mutual fund company. We don't get paid for selling annuities. We don't get paid for selling a stock. We don't get paid for anybody. The only, but the business model, your revenue model drives a lot.
The objectivity of the advice that you give as a financial planner. And so we here at practice CFO, we have a very strict [00:19:00] stance that yes, our clients pay more for us as their business and personal CFO than they do for their bookkeeper down the street or their 70-year-old accountant who used to do their dad's practice.
Yeah, we are a lot more money, uh, than that, but we are deeply, heavily and objectively and independently involved in the planning process with a fiduciary obligation to always put your interest ahead of ours. And what I have found, and what I believe strongly is that that type of planning and that type of advice that is truly technical, truly process oriented, produces results.
Only person that pays us is you, our client. And so rest assured that if we have a certain investment allocation in your investments, you just gotta know that's 'cause we truly fully believe that that is the right investments and they're the type of investments that we personally invest in ourselves as well.
Okay. Dental financial planning, turning chaos into financial [00:20:00] freedom. As I said, this is a presentation I do often. I'm gonna do it for you now as a part of my podcast series on dental financial planning for dental practice owners. Now, I don't know if this is gonna take up four or eight episodes, I just know it's gonna be a series of episodes that I'm really excited to jump in here with you and do this.
So if you are on YouTube, this is definitely a series, a podcast series where if you can watch it on YouTube, you'll get more out of it because I have very clear visuals that I put time into to support the narrative of the communication of the message. So here we are. And, uh, a a little bit about me. I always have to tell people, uh, a little bit about me as a dental specific CPA and financial planner.
I have the following entities or the following things that I'm involved in. I'll just put it that way. Number one, my main bread and butter practice, CFO, which is CFO Services, chief Financial Officer Services for practice owning dentists, [00:21:00] some associates who are looking to buy a practice, yes, but mostly practice owning dentists in the private space.
We really don't work with the DSO, we're very much about helping doctors thrive on a very personal level as a private practice owner. And that is the CPA services of accounting, payroll, and tax filing, both business and personal tax filing. And then most importantly, and the reason why I started practice, CFO wasn't the CPA side.
I didn't bolt on financial planning. No, I started it with financial planning. We bolted on the CPA services because we realized that to be great financial planners for dentists, we have to understand and analyze and have x-rays into the finances of the practice. And so that's why very early on we, uh, agreed to have both a CPA and a financial planning integrated function.
So it's one comprehensive holistic plan, which in my opinion and experience is what significantly accelerates financial independence for, for, for, for our doctors. [00:22:00] So that's practice. CFO. Uh, I'm also owner of the Dental Boardroom Podcast, as you know. Here we are. And then I have a separate tech company called Practice Orbit.
And if you listen to my PO podcast, you know, every episode you get one ad roll on practice orbit and you get one ad roll on practice CFO. At some point in the future, I'll probably. Maybe minimize those and apologize if they feel redundant. You can always skip past them if you know exactly what they are.
But Practice Orbit is a very unique technology that I've created. There's nothing of its kind. I will say it is essentially, and it's a Redfin meets, we'll say Redfin meets Amazon for dental practice sales. What do I mean by that? Well, we all know Redfin or Zillow, uh, but those are not marketplace platforms.
Those are listing sites and they pull from the MLS, the multiple listing services [00:23:00] and essentially one place where you can find all homes for sale, but you're not logging in and then buying the home. You're not interacting with the broker, you're not interacting with sellers, you're not interacting with banks or accountants or attorneys.
You're not interacting with all of the people in the transaction of the, of the home sale inside of Redfin. You find the house on Redfin, but then pretty much most, most of the transaction occurs outside of Redfin through emails and, and documents and e-sign and you know, all of that. A marketplace platform is different because not only does it have the inventory or the, or the listings in it, the products, whatever's being sold on that platform, but you also navigate the sale inside of that platform, and that's really important.
You navigate the sale. So I say Amazon because you don't find that, I don't know. You don't, you don't find those, that shirt you like and then you bounce out and you contact the seller to buy it. No, you buy it inside of the platform and there's a checkout room and all that stuff. [00:24:00] Have your credit cards in there.
Same thing with Airbnb. Same thing with OpenTable. You sort of like book the transaction on the inside of that technology. That is what makes it a marketplace. Other sites will call themselves a marketplace, when in reality they're a listing service and you, and you then click on a button to learn more.
You put in your email address and it bounces out, goes to somebody's email box, and then it's a manual process after that. So this is Practice Orbit is a marketplace where, uh, I am now recruiting brokers to put their listings on the site and then essentially trying to create what is a multiple listing service, what that is for real estate practice orbit is doing that for dental practice sales and may eventually move into other healthcare verticals, but really, really focusing primarily on the dental space.
Dental specialists as well, uh, orthodontists, endodontists, oral surgeons, et cetera, all in one place. And so if you are selling, you could have a broker, you could do this, you could go in there, create your [00:25:00] profile, you could put in some detail on your practice. It's all anonymous and nobody knows until it's published out there.
And nondisclosure agreements are signed and approved before anybody would ever know that your practice is listed on the site for sale. And it helps then manage the flow of finding buyers. We got a ton of buyers in the practice orbit system and then also getting digital nondisclosure agree. Digital offer letters, and then a workflow that the accountant, attorney, banker, and the dentist all operate in one common digital room with message boards, with a checklist and workflows that way, and document management that way.
Keeps everything secure, private, and highly organized for sellers, buyers, brokers, dentists, attorneys, and everybody involved in the dental practice sales. So I've been involved in hundreds of practice sales over the years and just saw that's a fairly chaotic transaction. Yeah. Very chaotic. And uh [00:26:00] uh, everyone gets lost in it.
Where are we? Where are the documents? What's the next step? Happens all the time in almost every deal. That's where brokers do help, sort of pull it along. They will move. Mountain and earth in order to get to the finish line, because that's when they get paid. And that's a, that's a, that's a value that brokers provide in the world, is helping drag, uh, from beginning to end at these dental transitions and practice orbit is there to help everybody do that with the first of its kind technology to organize that process.
And then lastly, I have Associates On Fire, which is free financial education for dental associates. Those looking to buy at practice. We talk about all the things around student loans, W2 versus independent contractor, getting ready to buy your practice. Credit scores, the process of buying a practice and stepping into ownership.
So that's Associates on Fire. You can go to associates on fire.com. Alright, so that's me, and those are all the things that I'm involved in on a day to day basis. Now, practice CFO is definitely the biggest of all of them. We have about 60 employees. We have 10 financial advisors and the [00:27:00] accounting department, a tax department, a payroll department, and a 401k and investment department.
With all that backdrop about me about financial planning, let's dive in. Financial planning for dental practice owners turning chaos into financial freedom. All right, so here's what I have on the agenda over this series of podcasts. Number one is I really want to talk about assembling your team because when I start off this podcast, I said that the originator, the source.
The, what the, the inception of your wealth all occurs inside of your dental practice. And it is remarkable the range of financial and operational success I see out there across dental practices. There are some, as you've maybe heard me say, who should sell their practice and they should be an independent [00:28:00] contractor because they will make more money with a tiny fraction of the stress.
That's just the nature of some, some of our personalities and some of us can handle stress and really juggle things and we can delegate well, and we don't necessarily get caught up in the details, but we're detailed enough. And some people really don't like that. They want to go do what they went to dental school for, which is fixed teeth, and then go home and enjoy their life.
And there's no right or wrong here, but there are definitely some who should not be an. Just like there's many CPAs in my world or financial planners who should not own their own business. They would be better off as an independent contract or as an employee and letting somebody else manage all that business site.
But if you're listening to this podcast, you are a dental practice owner or an aspiring dental practice owner. And if that's the case, if that's the case, then we need to have a well run machine. Otherwise it will drag you down. It's one of those things. It can really elevate you to a wonderful vocation [00:29:00] and life interaction with your personal life.
It can be a wonderful thing, and I personally would never take it back where I'm at having started practice CFO and run it and experience what it's like to be a small business owner. I love it. I'm passionate about it. There's an entrepreneurial aspect to it that just gets me so excited. I could never go back, but that's just me.
So you're a practice owner, so we're gonna talk about this and one of the most important things you can do running your business is to assemble your team. Now, when I say assemble your team, I'm not talking about your front office. In this case, I'm not talking about your hygienist or your assistant. I'm actually talking about sort of your C-Suite team.
Who are the people that give you strategic advice operationally and financially? These people are thinking partners. And this is a term I learned about a year ago, and I've said this a few times on the podcast. It is one of my favorite new terms that to have a [00:30:00] good thinking partner in our life, to help us evaluate the way that we are thinking through things, the decisions we're making.
These people help create clarity for us and they, if they're good, there's a lot of. Them who are not good thinking they will thinking, they will think you into a bad place. So you've gotta be, you've gotta vet this well and do good due diligence. And I have a thinking partner who I pay a very good amount of money to, but he helps me organize my life and my thoughts and my business.
And he helps me see it all together in this sort of interrelated modules of my life. And it has been unbelievably value valuable to me to have a great thinking partner. Now here at Practice CFO and as financial planners, that is our highest aspiration, is to be that thinking partner for you in your life.
And so this strategic team, I'm gonna go over who these people are that I think every practice owner should have. And the way that they sort of manage this team [00:31:00] is one of the most important thing things you can do as a dental practice owner. Now, if you say, Hey Wes, I want an $800,000 practice, million dollar practice.
Um, you know, I want to one, one and a half hygiene, um, hygienists in the office and just basic stuff. Maybe you don't need kind of this a strategic thinking team. Maybe you don't need that. That's fi that's sort of a very stable, classic model where you come in and you are 90% dentist and 10% practice owner.
However, if you wanna get to 1.5, two, two and a half, three plus, if you wanna get to that level of business where you have a very healthy financial life, because you've created this remarkable engine known as your dental practice, that experience, I think almost always requires external input to help you think through decisions that you've never had to think through before because you weren't trained on this and so much.
It's like raising kids. You've seen them, you know, you participated with kids in [00:32:00] different ways, but until you have your own and they're in your house and you're responsible for them 24 hours a day. You are learning as you go, and so getting advice, whether that's a therapist or a family sort of coach or you know somebody to just help you think through these decisions.
You're winging it. You are winging it, and there's a lot you can learn from books for sure, but having somebody who's kind of been there and consulted on it to many other people, there's something deeply rich about that. So we're gonna talk about that. Phase one. Assemble your team. I think that's all we're gonna get through in today's episode.
And then in the future episodes, we're gonna go through the following three phases. So there's four phases total. The first one, assemble your team. Phase two is develop a personal financial plan for financial independence. This is start with the end in mind. Start with the end in mind, what do you want outta life?
And then back your way into the type of practice and financial decisions that you gotta make today in order [00:33:00] to extend those decisions into the future to get you where you want to go. So develop a personal plan for financial independence. Phase three is to develop a business plan to support your personal plan.
Now, I know that this may sound very basic, but a lot of times I find in my own life the reality is I need to get back to like basic ways of viewing things. There's this term that maybe you've heard it, maybe you've haven't, but haven't. It's called Occam's razor. And Occam's razor means the simplest answer is usually the best answer, or the simplest approach is usually the best approach with a lot of things that you pursue in your life.
You really gotta distill it down to what is kind of the simplest architecture of that. And then from there you start molding your decisions. So phase three. What what I'm saying here is that all of this is, is basic as a starting [00:34:00] framework to then go deeper into each of these phases, which I will do. But phase three, develop a business plan to support the personal plan that you authored.
Uh, number four is then you implement this plan, both the personal and the business. You monitor it, you revise it as life changes and your goals change 'cause they will, and then you repeat this. I like a cadence around it. So, so you'll, uh, you'll see later on in one of my next few episodes when I get to this phase four, I'm gonna show you and I'll have downloads that you'll, you can get in the show notes, but I'll show you what I think is the cadence of activities that you do throughout the year and specifically what months to have a healthy financial planning process, uh, that runs your, your financial life.
So I'm really excited to go over all of these because this, a lot of the other episodes I talk about, like I did just did an episode on fraud in your dental practice, embezzlement. A lot of that stuff I know more peripherally, [00:35:00] peripherally, and I'll study and prepare for my podcast episodes. Um, but what we do here on a day-to-day basis at practice CFO is all about good, healthy financial decision making today to set you up for a better tomorrow.
And so that's what this series of podcast is gonna cover. In the Turning Chaos into Financial Freedom, financial Planning for Dentist series. So let's jump into this first episode. Let's go ahead and jump into this. Lemme just adjust my screen a little bit again, inviting y'all to go to, um, to go to, uh, YouTube to watch this where I have some very distinct visuals on this.
Okay, so phase one, assemble your team. Here is the structure of a great team inside of a dental practice. Now I'm gonna, I'm gonna orally explain what I'm looking at here. So those of you in the car or running or whatever you're doing, can try to visually map this out in your brain. At the top [00:36:00] of the screen is you, and it's a, it's a triangle of you as the CEO.
And yeah, you're not Amazon or ExxonMobil or any big company, but you are still the chief executive officer. Remember, most of you are set up as corporations. You're not a C corporation like Amazon and ExxonMobil, you are an S corporation, which is more of a small business corporation. But that said, you're a corporation.
And as the corporation there are officers and you are the chief officer, and they call that the chief executive officer. That's you, the CEO. And I really want you to see yourself as much as a CEO, as a doctor if you're a business owner. I think in my opinion, you need to view yourself that way. CEO and doc, you may even see yourself first as a CEO and second as a doctor.
The practices that are doing 3 million plus, these big, big whoppers out there, trust me, the founder is first a CEO business person and they are second [00:37:00] a clinician. And I've shared before about my, one of my, one of my just awesome friends and clients here in San Diego got a, he is got a five and a half million dollars practice.
He only does about four or $500,000 in production. Personally. He owns the practice a hundred percent. He's converted it to a multi-specialty with some associates, and he is done that very successfully. He is three part CEO and one part doctor. Now, that's a little bit of an extreme example. That's, it's hard to get to that place because the amount of operational and leadership skills you have to develop to get to that point requires intense, deliberate, intentional effort.
And that is not hard. That's not easy. And the, the thing that prevents most dentists from doing that is A, they don't want to, and that's fine because that's just a life choice. There's nothing good or bad about it. But A, they, they either don't want to, or B, they don't want to take the time on their, uh, while they're at work, uh, to work on the business stuff.
We've all heard of the term [00:38:00] on the business versus in the business. On, in the business is doing dentistry on the business is everything outside of the operatory that flows between patients and cash and operations. It's, it's all of that. That is hard to learn. And so this particular doctor, I think he spends, I know he spends his entire day on Thursday going deep meeting with his consultants, his teams, his processes.
He's very deep in into that. He delegates exceptionally well, and I, I think he may even spend more than one. He may spend two days a week on the operational side of, of things. So at the top of the, the diagram that I'm looking at, at this infograph is you the CEO. Then there's two wings coming out and slightly down from the CEO.
And here are the two wings that I have. The first one is A CFO, and the second one is a practice management consultant. Now, if we use the analogy of big corporations and we stick with this kind of chief [00:39:00] concept, chief executive officer, you on the left, the CFO stands for the chief financial officer. And in every business, every large business, every CEO has a highly skilled.
CFO and the CFO isn't just doing the accounting for the business. No, the CFO, all that's delegated way down the line. The CFO is the one who is deeply in the financial workings of that business. Organizing the type of reports to give visual understanding, to then give to the CEO and think through as a thinking partner, going back to that term as a thinking partner with the CEO to make critical decisions about the outlay of their money.
One of the most important tasks of every CEO on the planet is how do I allocate my surplus dollar? Do I use it for marketing? Do I give it as a dividend to shareholders? Do I buy another location? Do we acquire another business? Do we hire more people? Do we invest it in [00:40:00] technology and ai? That decision. C comes down into a dental office and it has the same relevance.
Do I build out another operatory? Do I hire a marketing consultant? Do I hire another hygienist? Do I take it out and put it in my personal investment and savings account? You have to decide that. And now if you work with practice CFO, you know, in every one of our meetings, we, you know, we pull in, we pull in the p and l data, we pull in the tax data, we pull in the payroll data, we look at your personal balance sheet and your goals.
But at near the end of, of those meetings, we always get to this one tab in this Excel spreadsheet. That's the financial forecast, and we will forecast out the next six to 12 months based on all of this, your, your labor laps, supplies, facility, marketing overhead, your debt, your expected taxes, your contribution to your 401k, how much you need to live.
We look at everything and then we define is there gonna be any money left or not? If there's not any money left after covering all of your, your, your, your basic necessities, well, we got [00:41:00] an income problem and you, you really, the first thing you need to do is go, probably go hire a good marketing consultant, good one.
Not a bad one, but a good one where you gotta figure out how to get your collections up. But once you do that and you start to have spare dollar after your overhead debt and taxes, you have a spare dollar. What do you do with that? What do you do with that? That is like, what do banks do when they have more deposits than their required vault?
The Fed requires that all banks keep a certain amount of their vaults, and then everything above that, every dollar above that, banks want to lend it out. They want to get a return on that. Well, that's what you have to do. Now, you may get a return by hiring a hygienist, by building on another operatory, by buying a cad cam, by putting it in your 401k by paying down debt.
There's a lot of different ways, and not every way is equal. Paying down a three and a half, four and a half percent to tax deductible debt. Is not a great use of your dollar if you're sitting on $50,000 of credit card debt. And that's a clear example. That's an obvious example, but there's a lot of more [00:42:00] nuanced examples around that.
Do I pay off my home debt or do I pay off my practice debt? Do I invest in a 401k before I pay off my student loans? Those are the types of questions that matter because the differential benefit by doing that prioritization process right in financial planning, has this compounded incremental growth over time.
That will have a massive difference on your personal balance sheet in 10, 15, and 20 years. So surplus allocation is, is absolutely critical and a good chief financial officer can help provide the data and oversee the data, package the data, and present the data to help you as the CEO make really wise decisions around your money.
Now, dentists in a 1 million, 2 million, 3 million, even $4 million practice do not have. A dedicated CFO in-house like a big public company does because it's very difficult. CFOs typically have a lot of background, a lot of 'em have MBAs, A lot of 'em are CPAs and they're very good at what they do and they demand a very high dollar.
Uh, if you [00:43:00] wanted a CFO dedicated full-time in your practice that's really good and qualified, you're gonna be paying at a minimum 200,000. You're probably gonna be paying for a good CFO closer to 300,000. 'cause that's the going rate for really great CFOs. So dental practices, obviously it's, you just can't quite afford that.
If you get up to like, I don't know, you're a platform of, of practices. If you're consolidating, forming A DSO or some large group, uh, uh, entity or structure, at some point, you know, you get to 15 20 million, then it's probably a good idea to consider a full-time CFO in-house. That said most, most dental practices are not there.
They can't afford that. That's why practice CFO exists. Obviously this sounds like a plug. Maybe it is. I'm not ashamed about that. I love what we do. I think we do a great job and I think the return on investment in our practice, CFO services is massive. Especially if you're in a high tax state like California, 'cause taxes such a massive friction and dentists overpaying [00:44:00] taxes all the time.
Even when we save them a lot of money, they still are like, Wes, do I have to pay that much? Well, do we do what we can? But you still live in this country, you know? So the CFO, well we are here. Pre C ffo is, we are a fractional CFO. There's others like us out there. Obviously. I think we are the best 'cause we.
Put a lot of time and thought and investment to doing our job well here at Practice CFO. And really, I only hire the best. I mean, check out their resumes on our website. These are incredible. CFO advisors, that's what we call them, CFO advisors. They're all, um, uh, CPAs or, uh, something similar to that. And all follow a very, they actually follow the exact same process that we've developed here in our clinical treatment for our clients around their money.
So that is the, uh, the advisor, the thinking partner on the left of the CCEO. That's, that's the CFO on the right hand side of the CEO is a practice management consultant. Now, there are fairly sharp [00:45:00] opinions about practice management consultants out there. Uh, just like there are financial planners and even CPAs.
Some hate their CPA, they never get back to 'em. They don't help 'em save in taxes. So wherever you go, there's good and bad. Same thing in dentist. There's good and bad. Every career. So when I say practice management consultant, I wanna emphasize here, good practice management consultant in the big corporations of the world.
Going back to this comparison of you as a small corporation to a large corporation, they don't, they, they don't call 'em practice management consultants. You know what they call 'em? They call 'em Chief operating officers, COO, and they're hired full-time and they're making really good money at these big corporations, helping them oversee the processes, the throughput, the, the way that they deliver their product or service.
Those are the COOs. Well, in the dental space, we really call them practice management consultants. And there is sometimes [00:46:00] a little bit of overlap between a practice management consultant who wants to see really good financial reports that the CFO does. And that's why this set of three people is what, what I'm calling your, that this is your main.
Thinking partner team. Now, the, the practice management consultant and the CFO, they're not employed on your payroll. They're external sources unless you're a massive dental practice and you can afford to pay full-time in-house. These are external, what's called fractional service providers around the finances.
That's us or somebody like us and the operations as practice management consultant. Then the fourth person that I think is even more important actually than the CFO and the practice management consultant. Yeah, I, I say this and I mean this, I think more important is a phenomenal operations manager. Now, I want to, I want to dwell on this a little bit because in [00:47:00] among all of my, so we work with about three 50 dentists throughout the country.
They almost always have, well, no, they do. They always have somebody in the front office. Sometimes you'll hear different terms for this person sitting up there and kind of managing the front desk area. Uh, a office manager, a true operations manager, that's the term I really like. A true operations manager isn't just dealing with, uh, billing.
They're not just dealing with maybe order supplies or scheduling. An operations manager is overseeing the operation in a way that you don't have to get deep into the details and they know the business exceptionally well. And that literally, if you passed away, sorry to sound morbid, if you didn't wake up and another dentist was to step in, that operation manager would keep everything going with almost no disruption.[00:48:00]
The only thing being replaced is. The clinical provider. Now that said, an operations manager's never gonna re replace a great CEO, but I hope you follow my analogy. That, that they DJ the operations so well that you know you can rely on them, so that you can focus on producing well, a great patient experience, creating a phenomenal culture, motivating your team, and inspiring your team, and being the face of what is the brand of your business.
That's what you as a CEO need to be doing. The operations manager is this one, just orchestrating these day-to-day things. Just DJing this and DJing that and bringing it all together so that you can do your thing as the CEO. Now let me, let me compare this to my situation. Now, I know I'm not a dental office, but trust me, just trust me, the, the concept and the operations, the chemistry of this all, it is the same.
What, what I've been doing at practice CFO since [00:49:00] I got into this for, uh, it's been about 18 years, 17 years since I've been doing this. I have now, I've delegated a lot of clients. If, you know, maybe we used to work together and, and now I have another advisor that you're working with. And, and in a way it's like, I've delegated clients to associates, but associates that I vetted, trained who are very good, who all follow the same clinical process.
But I am the original clinician and owner. I was the owner operator. I still am. I have a, a few partners now, but I own the majority and I'm an owner operator of the business. I'm the, I'm the CEO, but I have a operations manager. She's my chief operating officer. Her name is Janine. And I can tell you that if I die tomorrow, practice CFO will carry on with.
Very little disruption because Janine is orchestrating the day-to-day here at practice CFO. Now I, let me I, [00:50:00] please follow me. Please listen, please don't tune out. I cannot tell you how important this is. So about three or four years ago, we got to about 35 employees or so, and it just started to get rough because people were scattered.
COVID came, a lot of people started to work from home. People moved away. Everyone started to feel comfortable doing virtual stuff, and things got disjointed and scattered. And for a period of time, practice, CFO was feeling. Disjointed. Like the, like the rails were like the wheels were starting to shake on the tracks.
And I'm like, okay, I wasn't trained to be a business leader to oversee processes and culture and all of that. I've gotta figure out a way to harness this thing and maintain a organization and flow. So we're all rowing with the same cadence here at Practice CFO, with the same messaging and the same goal of helping our doctors become financially independent.
And so I adopted this program that I've mentioned many a times here on the podcast, and it's called [00:51:00] EOS, where the entrepreneurial operating system started by a guy named Gino Wickman, I don't know, probably 20 years ago. And it's grown phenomenally, and it's a, it's an operating system or a framework to run a small business.
And it's really designed for businesses that have anywhere from maybe, maybe five or six employees all the way up to maybe 150 employees. And I go to the EOS conference every year, been doing it for four years straight now, and it's a, it's a little bit of a Kool-Aid fest. We all get pumped up. You're with a bunch of other owner business owners.
I've met actually various dental practice owners as well, trying to be really ambitious and grow a bigger dental practice. And it's really exciting to be in that place where you're just talking with other people who are experiencing similar things that you are. How do I be a great leader of my business?
How do I create success out of this while also keeping peace and order in my own personal life so that one doesn't crowd out the other. And I just love this organization, [00:52:00] so I'm giving a big shout out to it. I don't get paid for it. I'm not, I'm not a, I'm not a sponsor or anything. I'm just, this is personal endorsement, straight up.
And it's got a series of books. And there's, the focus on, in the system is on various categories and they, the, the, they call these categories. The, the, the traction wheel. So I'm just typing in right now. You can type in traction wheel EOS and you'll go to images and you'll see it. And in the traction wheel, there are six areas that you build this framework or system of leadership and management around.
One is a vision. What is your vision for the, for the practice? And it asks you these eight questions that everybody in your company should know, what these eight questions are and what, what is the answer to these eight questions and that everybody shares in this vision. Now you as the practice owner.
The most important thing that you can do is help everybody in your practice feel uplifted, feel cared about, feel like they're a part of something important. And yeah, [00:53:00] there's thousands and thousands and tens of thousands of dental practices out there. It's not like you're open AI creating the first AI engine.
I, you don't need to be that to create this really cool vision about what you're doing. It. I have been in some dental practices where everyone feels plugged into this really great concept of what they're doing, and they're, they're doing something great for their patients. And it's different, it's nuanced and it helps leads to better, uh, patient satisfaction and or oral, um, systemic health and whatever that vision, the way you shape that vision to give employees a little deeper meaning to why they come into work that pulls your, pulls so much of the effort in a common direction that people can, can find motivation by that it's kind of like, it's, it's kind of like this.
This mist or air that sort of breathes throughout the entire practice that enshrouds everybody. So when they're making decisions or conflict comes up, everybody underneath all of that tension that comes up [00:54:00] in forms underneath it is everyone remembers, oh, that's right. It's all for this cause that we're all trying to work towards here.
So what is the vision? That's the first element on this traction will. The second one is data and that scorecards measuring those financial reports, that's operational reports. We've partnered up with dental intel, um, and dental Intel gives you these certain scorecards to track. We've all heard the quote, most of us have that what's measured leads to improvement and it's a broader quote.
Uh, what's me? In fact, lemme look it up for you. What's measured gets improved. Quote, I, I wanna get this quote right. The quote is, what gets measured gets managed, even when, and that's not it. What gets measured gets done. What gets measured and fed back gets done well, what gets rewarded gets repeated. So that's a variation of it, but measurement is my main point there is measurement.
All right, lemme come back to my, my [00:55:00] podcasting page here. Alright, so coming back to this traction will. Data, so vision and then data. Data is your scorecards, your measureables. Then it goes, goes into process and documenting your process and getting everybody to follow your process. So if you have to hire a new front office because the other front office moved away or retired, you've got a process that the new, um, person steps into and it's already laid out for them.
They don't need to recreate the will and figure it out and come up with their own process. Everything is standardized with processes and a basic education. So new people can all follow that and everybody does. So that's process. So vision, data, process. The next one is traction, and traction is where it all comes together, and it's where that, that part of the tire actually hits the road and propels you forward.
You get traction and everything in EOS is about getting traction and compulsion forward and in traction. Part of this is you are defining the goals for the practice. What, and they call 'em rocks. [00:56:00] What are our annual rocks and what are our quarterly rocks and how often are we gonna meet to discuss these, these rocks?
Now, I don't want you to get too worried that we're gonna have to meet every day and spend two, three hours a day in meetings in order to do all this stuff. You don't. But you do need a weekly meeting with your leadership team. That maybe is an hour. I meet every Tuesday, 10 o'clock for 90 minutes. The most valuable 90 minutes of my entire week.
And that's called a, an L 10 meeting, a level 10 meeting, which is a term within the EOS platform that is very, very, um, productive. You don't shoot the breeze. Yeah. For two minutes. You shoot the breeze. Then you actually have a software with a timer clock on every single agenda item on that agenda with a software that helps you document and track your to-dos and your rocks, next steps, yada, yada.
And then you rate the meeting at the end of it on a scale of one to 10. I mean, it is, it is a very structured, highly productive type of meeting called an L 10 meeting. And that's what happens in this traction area of this EOS wheel. Then you've got issues, [00:57:00] and issues are things that come up on a day-to-day basis that you've gotta post on a board somewhere and say, in our, in our meeting, we gotta discuss this issue.
And we have to what's called IDS, it IDs, it is identified, discuss and solve. Identify the issue, discuss it, and then solve it. And you move on to an IM implementation and you, you, you carry out. So issues properly identifying, talking about tackling and resolving issues. 'cause trust me, I know you know that issues are constantly emerging in your practice.
And the last one is people getting the right people in the right seats. Maybe you've heard the Jim Collins good to great concept of getting the right people on the bus. Well this is about getting the right people on the bus and then getting them to sit in the right seat. And I have had people change from one department to another here at practice CFO, when we just realized they were better to, they were great.
They, they were talented. We wanna keep 'em. And we just realized they were [00:58:00] better in a different seat. And so getting them in the right seat. So to summarize the EOS model, it's vision data. Process, traction issues and people. And the EOS model has a book, it's not long book, but a little book for each one of those categories.
And, uh, and we have, we have religiously followed this. There's, there's a lot more of this EOS model, but that is kind of in a nutshell how this, this business model works. Now, one of the key things here is the cadence of meetings that you have with your leadership team and with your whole team. And what are you, what are you supposed to be talking about in these different meetings?
They call it a pulse, your meeting pulse throughout the year, sort of like a cadence. And in a future episode here, as a part of this series, I'm gonna show you what I think your pulse should be as a dental practice owner, in my strong opinion. Okay? So let me now come back to the phase one assemble your team.
Now I wanna go back to this operations manager. In the COS model, [00:59:00] the most important relationship in the business is the CEO that they call the visionary. And the operations manager who they call the integrator, the visionary integrator, that relationship is like a sacred one. And my, my integrator, her name is Janine, and she came on when I first started.
The business in 2014 as my office assistant. And I knew from day one from the interview that she was highly competent and she came on board. She was in a business that had, um, been, I think it was sold or closed down. And so she was now, uh, looking for a new position and she was taking a step down for a little bit in terms of compensation.
'cause I could not afford much at that time. But she took a risk. I gave her a vision. Here's what I want to do with this company called Practice, CFO. Do you wanna be a part of this journey that we have that has meaning of, of helping our doctors become financially independent and have meaning in their life?
And we're gonna create a whole system around how to do that as [01:00:00] effectively as any service provider in the marketplace and really become the best at that. That, that was my vision and my goal. And she, she, I rolled her into that vision. She came on board and she has since moved her way up into different positions to the point where now she is running.
The day-to-day operations of practice, CFO. She leads our weekly L 10 meetings. She preps for those. She manages them. I show up, I contribute as a thinking partner, as the CEO, as a visionary. But she operates it. She operates it. She deals with raises here at the company. She deals with terminations and putting people on performance improvement plans at the company.
She prepares for our quarterly, um, all hands-on meetings. I mean, she is orchestrating this thing like she's the captain of the ship and it has created time for me to do things that I, she loves that she's boots on the ground. Real world person. Highly detailed. [01:01:00] Great operation. Me, I don't. This, I'm not great at details.
I love to delegate. I love to do these podcasts. I love to coach and advise and present and create brand, and I love to get my team all excited. I do a monthly visionary message that I send out, recorded, uh, visual and voice to my entire company of about 65 people. And it's about a five to 10 minute just little visionary message telling them what, what we're doing, what happened this month, where are we going as a company, and the things I'm excited about, and those are the things that I'm so passionate about that I love it.
So when I come into work that feel like I'm coming into, it's hard sometimes to distinguish between my, the, the hobbies I love and the business I love because this could get dangerous if you don't have some distinction between the two. But I've never really been a big believer in work over here and life over there.
For me, it's, it's all life and how do I enjoy life and how do I love life, and how do I enjoy my relationships in [01:02:00] life, in and outta the practice? That said, I would never let my business ruin my relationship with my kids, for example, and not promote happiness in my personal life. However, I don't really draw.
It's such a distinct line between the two. That's me. You know, I'm a little bit on a tangent right here, but I'm reading a book called The Three Marriages, and it's a fantastic book. And the author talks about the three marriages in our life and the marriage is the one we're all used to, which is the marriage with our partner, the legal marriage.
And then there's the marriage with this thing called our vocation. And, and then you have the marriage with your own self, which is your personal life, your identity, your hobbies, the thing that nurture your soul the most on a very private level. Those are the three marriages that matter. And what he talks about is if you try to put each of these area, these three areas in separate modules, and you sort of block off your time for this and this and this, what happens is they really start to compete with each other.[01:03:00]
And that competition actually isn't a very healthy thing in our life. And so he, he's a, a bit opposed to this concept of work-life balance. And it's more about creating a relationship across these marriages, sort of a unified approach where it is promoting the, the most productive, happy, fruitful, fulfilling life that you can have.
Because that may mean that there are periods of your life where you are a lot more involved in the marriage with your spouse or in the marriage with your work or the marriage with yourself. And things will ebb and flow. And understanding that and allowing a flexibility and elasticity to that is actually a very important aspect to a fulfilling life, especially if you're a business owner and all you dentists owning your practice.
You all are business owners. You could say you're, you own a dental practice, but, but the truth is you own a business. And that is a complicated [01:04:00] vocation. It's very different than being on somebody else's payroll, as you know, as you know. So let me talk about this integrator, this operations manager a little bit more.
Um, how do you find somebody that is that competent, that trustworthy, and that skilled that you can delegate the vast majority of the operations outside of the operatory to this person? That's not easy. It's not easy. But this is, this is the, the, so earlier when I said the most important thing you can do as a CEO is to create vision and culture and energy and excitement that creates this tide in your practice, this flow of energy.
The second most important thing is you choosing your roster. Who's on your team? And so. Hiring effectively and always searching. You've heard this from me before, this concept of a BI [01:05:00] always be interviewing always. It doesn't matter if your positions are filled. If you hear about somebody who's looking for a job or there's somebody who's happily employed, uh, but you meet 'em at a conference and you strike up and you're like, wow, that person was impressive.
Put 'em in your Rolodex. Write 'em down. Share contact information. Check in once every six months or a year. Hey, how's it going? You know, we've got this new opening over here. Now are you like, are you happy where you're at? And it's not that I'm wanting you to go out and poach people, but creating that network.
Creating that network is, is almost like you're creating this pipeline, this funnel of potential people that, that you're sort of flowing down to you. So when you have a need, you've already got something that's been bacon on, on that, or you know, simmering on that back burner for a little while and now you, now you capitalize on that relationship.
I do this all the time. I do impromptu, I don't call 'em interviews, I just call 'em like networking or discovery calls. 'cause then it's, then it's very informal. [01:06:00] No one feels like they're being unfaithful to their employer. It's just networking. That's all it is. It's networking. So always be you call, always be networking.
I use the term, always be interviewing. But bottom line is you gotta be effective at choosing your roster because you get good people. Not only are you gonna grow your business, make more money, but you're also gonna be able to attend to those other areas of your life that give you meaning. You have a bad roster of people.
Or even a couple bad apples in that roster, and it just disrupts the whole flow. And I bet most of you are, are, are, are nodding your head saying, yep, yep. I have one of those. I have one of those. And you gotta, you gotta bite the bullet. You gotta figure out how to get them off. This has been one of the hardest parts of my job as a, a, growing this small business.
This, this practice of mine, the CPA financial planning practice. One of the hardest things has been terminating people that I've worked with because I, maybe this, maybe this is me, but I don't like conflict and I don't like making people [01:07:00] feel bad. I, and some people are like pretty callous about, they're okay.
Their emotional system is very like thick and they don't, they don't cry over that. They're very straightforward doing that. Now the operations manager, that person kind of has to have a little bit of that almost. Pinge of ruthlessness to make hard decisions because hard decisions are essential when you're growing your business.
They just are, especially when it comes to your roster of people on your team. You have to, you have to, you have to let those bad apples go because they, they disrupt everything else and they create a cancer, a soar, a, a black spot in this flow of energy known as your vision and culture. You gotta get rid of them.
And so find that operations manager, that integrator that is gonna be, that person will be the single most important decision. One of the most single important decisions you'll make as a dental practice owner. The first one's probably which practice you buy, you know, [01:08:00] but this is up there in a top three, easily finding that part.
It's not just a front office person sitting in a chair and greet and bill and that kind of stuff. Now, if you have a million dollar practice, it's kind of hard it to have an operations manager. Because you don't have the capital to be able to have somebody who does the billing and sa have somebody who o of course the assistants who prep the, the operatory and have, you know, a few different people at the front desk to schedule versus the different tasks.
It's hard to find somebody who can be a true operations manager that oversees the, the processes and functions and helps create those in the business because you don't have enough capital to do that. Well, I didn't either and I didn't have debt when I started the practice. My, my business and I didn't have any outside money, so I had to use retained earnings.
I had to use retained earnings and retained earnings is simply what's left after I pay my overhead debt and taxes and paying myself and the, and keeping my own personal costs down in my personal life allowed me to have surplus money [01:09:00] to then invest more in better people. And then that. Catapult you to that next level of practice success.
And that's why the financial planning on the personal side, I'm gonna talk about this a little bit more in just a moment, is essential. If you wanna break through, if you're constantly living on the edge financially of your finances, you're never gonna break through. You're just not, because you don't have any room for, you don't have any margin for error.
And so you gotta hire somebody who's at a lower cost because you can't pay the money to find somebody that's gonna be more qualified for that job. So this your whole roster, take the time, but especially this particular person, this, this common office manager, that's fine. I prefer that you actually call 'em, uh, your operations manager or even use the terms visionary and integrator.
I, I, I, I, I, I, I love those terms. We use those terms all the time here. Okay. So then now down below is your, is your general team. You got your hygiene, your assistant, [01:10:00] front office, and associates. Now, how often do you meet with these various people? Are you ready? With your CFO you should be meeting every three to four months.
And if you're a client of practice, CFO, and you own, you know, your dental practice, our, we're trying to meet with you three at least, at least three times a year. Sometimes it ends up being two. If you're sort of like in, in a, in, in the rhythm, what we call the maintenance mode two, but our preference is three.
And if you're newer, you probably need to meet four or five times as we get this financial infrastructure in place in your business to give these reports to make good financial decisions. So every three to four months schedule it. You can try that with your CPA. Just remember that CPAs are not trained as CFOs.
CPAs are historians. CFOs are people that look out into the future. It's a very, very different set of mindsets, of functions, of skill sets. [01:11:00] They're very, very different. One is a finance, which is a perspective action activity, and one is accounting, which is a historical activity, whether it's preparing financial statements or filing a tax return.
These are two very different things. So a lot of times dental practice owners go to the CPA thinking, this is gonna be my, my, my financial coach. Yeah. They will tell you a little bit about depreciation, how you, you know, how you can depreciate that new dental chair or they'll help forecast out what you're gonna owe in taxes.
They'll help do that and they do a great job. CPAs are very intelligent, they're great people, but they're not trained to do deep financial planning, what's called financial planning and advisory fp and a. That's a different skillset. And now some of them are deliberate in learning that like a general dentist may learn how to do, you know, a dental implant.
Great, but most. GPS by their general GP education don't learn that they have to go outta their way to learn that extra skillset. Well, that's how CPAs are. [01:12:00] So, and that's what practice CFO really did. And from the onset is the focus is on the, the future. And the CPA side is just to drive the data to have good x-rays, financially speaking.
So every three to four months with the CFO, you can try it with your CPA as a part of the show notes. I've got 10 questions you can ask your CPA every time you meet with them to help try to shape them to be that CFO. Just know a lot of times they don't have the system or the mindset or the tools, the Excel spreadsheets, they don't have that kind of stuff prebuilt to help go through the deeper analysis of integrating all the financial elements in your ecosystem.
So. Um, you have to just be very wise about that. And then there are, uh, there are financial planning based CPA, dental CPA firms out there. We are one of them. There is a handful of them. And, um, and you can, you can, you can look at them local, you can look at, if you wanna try to find somebody local, you can.
But in [01:13:00] my strong opinion, dental special, it's a specialty knowledge today in my style of business where I don't have to be physically present to give the advice. Specialty knowledge is more important than geography. Unless you really like to go golfing with your CPA or financial advisor. I would say find somebody who is most competent to help you make the best decisions financially and hire them.
It doesn't matter if they're in a different time zone. That's my strong opinion because the complexity of business is intense these days. And so specialty knowledge needs to be commensurate with that intensity to be valuable. Let's now look at the other side, the. Operations consultant, a practice management consultant.
I'm not a practice management consultant. They will come at you with different sort of cadences and suggestions. Just my thought is that you should meet with them at least quarterly, and ideally you would meet with them monthly and maybe an hour long meeting, and then quarterly, maybe a longer two or three hour meeting.
Uh, [01:14:00] but there needs to be a cadence with them. The ideal cadence, and I love to do this where it's possible with our clients at practice CFO, is that once a year, the practice management consultant and the CFO and you, the CEO all meet together in an overlapped meeting where everyone is sort of brainstorming together both the operational and the financial side to make really good decisions.
That's an incredibly value me, valuable meaning right there. Okay. For example, on that note, a practice management consultant will define your, your, your, your bam, your bare ass minimum. They will do that and they'll tell you it's 120,000, 180,000, 230,000, whatever that is, they'll calculate it. But what the practice management consultant does not do is say, what are your financial goals personally and what do you need to make in your practice?
And collections such that after overhead debt and taxes, you have enough to pay yourself and pay your future self the goals that you've defined. [01:15:00] So, so connecting that very personal activity with the business operations is something very unique to what we do here at Practice CFO. So if you tell me you wanna retire at age 60 and you wanna live on $15,000 a month and you wanna fund your kids' education at an average, uh, at an average uc school in California, you know, we can run all that, all, all those numbers to then back in.
It's like reverse engineering back into your practice. We know your overhead debt taxes, we can back into what is your, what I call your goals-based break even. Your goals-based break even. Uh, so the practice management consultant will call that bam, we call it your goals-based break even. I think those two should talk so that they're all agreeing on what is a reasonable bam.
Now, I'm gonna talk about, you may want to have all those goals personally met, but that means you need to collect 200% more than what you're collecting now. It just may not be feasible. So I'm gonna talk [01:16:00] about finding a, a healthy equilibrium that you're on, a plan that you know is actually a realistic one.
So stay tuned for that. So the practice management consultant, you should be meeting with monthly or quarterly, and then the operations manager, this integrator person that's on your payroll and DJing the operations of your practice. That should be a weekly meeting, hands down, no question, every week, unless you're on a important vacation or dead, you do that meeting every week.
This is one thing that you, Dennis, I love you, but you like to skip meetings a lot. And it's the meetings that is where you're actually making some of the most important decisions. If you run that meeting consistently and you run it right now, the way I do it is, like I said, every Tuesday we start at 10:00 AM We end at 1130 on the dot every time.
And then we rate that meeting at the end of it. And we use a, a software called rei, uh, which is baked into Microsoft Teams. If you're a Google shop, uh, you can have it baked into, I think you can have it baked [01:17:00] into Slack or you can have the software standalone on a website and use it that way. But, uh, in my strong opinion, strong opinion, if you're gonna try to run an operational system, you need a software to help you do that.
'cause it's a chaotic thing. And this other one is called 90, that's, it's called ninety.io and that's a great one as well. EOS actually has its own, uh, proprietary software. I hear it's a little bit questionable. So there's about three or four of these, but 90 is great. Uh, reti is great. You could demo both of those and use it in your, in your practice to, to run.
If you wanna get serious about running a management and leadership structure on a, a sort of a predefined or preprogrammed framework, you really need something to help you do that if you want to do it effectively. So meet with her or him, him or her, either way, or they either week you meet every week, you meet with them, and you [01:18:00] follow this very consistent agenda.
And now during the week, you are posting things to the, what's called the issues list. And I have on my phone, there's actually a text number. I just go in there and I type EOS and I type it in there and automatically feeds into the software. And then during the week, so we're, we're sort of pinning, so to speak, digitally, these issues that come up like, oh, um, we need to, we need to address our supplier relationship because it seems to be getting really expensive.
Or we need to revisit our pump, which is about to break down. We need to revisit our hygiene compensation, or we got bonuses coming up, or whatever those issues are, you just post them there. And then when you get into this weekly meeting, you are priority. You're literally saying, we're gonna talk about this one first.
This one's second, this one third. You click a button, it prioritizes them. And then you, you drill through these things very efficiently and out of those come action items that are then assigned. Now, what's great about having a group, a good integrator, is they're the ones managing the software. They're typing everything in.
[01:19:00] You're just there to think, to advise, to coach. You're the CEO, you're the, your, your voice matters the most. But when it comes to execution, their voice matters the most. They execute and it's a highly, highly productive meeting. So I have here, uh, my integrator, but then I have the head of my accounting department, the head of my tax department and the head of our investment department are also on that leadership team.
And so we, the, the group of us meet. Now, I think it might be a good idea from time to time to invite in your CFO and maybe your practice management consultant into that weekly meeting, um, so that there's some overlap on what you're all trying to do together. Now, there's no hard and fast science about who should be in that meeting.
And in a dental office, it may just be you and the operations manager in most dental offices, sub 2 million when you start to get bigger and maybe start to get three, four, 5 million and you maybe have a more of a highly involved, uh, marketing person, for example, and [01:20:00] maybe you have them join some of those meetings as well, maybe every other meeting.
But you can decide on, based on where you are in your evolution of growth as a practice, who would be good to join that leadership meeting every week. That's very different from the final meeting. Now, I'm gonna mention on the bottom of my screen, underneath the hygiene assistant, front office and associate are your daily huddles and periodic trainings.
Your weekly L 10 meeting with your integrator is very, very different than your daily huddles. The daily huddles, which these are essential, you really need to be doing these, especially if you're really trying to grow a, a successful dental practice is have these, you don't need to be long, but they're very structured and really it should be your operations manager, your integrator that's running those, not you.
You now, you should absolutely be there. If you don't show up, no one's gonna take it seriously. You have to show up and be there, and you gotta be the voice of authority and inspiration. But really, it's the operations [01:21:00] manager who should be running the details of that meeting. It's like the quarterback in the huddle, sort of making assignments.
Here's this position. You're gonna run this route, all right? Be aware of this. The defensive lineman's gonna do this. That's what the operations manager is doing. Sorry for the sports analogy. I know some people hate hate them, but those are, those are the daily huddles and periodic training. So that right there, this little visual is my perfect design of a great team structure, who you meet with, and how often you meet them with them in this, this sort of cadence or pulse.
So phase one, assemble your team. The last thing I'm gonna say to end off this podcast episode is again, you're gonna say, Wes, I don't have the funds to have a CFO model. I pay my book PE my bookkeeper. $700 a month, $800 a month. A good CFO is gonna cost $2,000 a month. I mean, that's a lot more than a full-time CFO that's gonna cost $250,000 a year.
Uh, the $2,000 [01:22:00] a month if done right. We'll save you that much just in taxes alone. Let all the other stuff they do around budgeting and cash flow management and discipline and debt structuring, all of that, that a good CFO is gonna do. And all of those things we, we, we do here at practice CFO. And so you're gonna come and say, Wes, I can't afford this stuff.
I can't afford to pay a higher sort of, uh, CFO model. I need to stick with my bookkeeper model. Or I can't hire a practice management consultant. They, they're wanting $80,000 for a one year commitment, whatever. I get that question. But this is just one of those things where. You have to step back in order to step forward.
Like those who have money, make money. It takes money to make money. That kind of concept is very real. So how do you do this? Well, on this last screen I'm gonna show is less is more. Less is more. And my concept here is that in your personal life, you [01:23:00] have control over that. You have an extensive amount of control over that the house you buy, how often you go out to eat, what type of restaurants you go to, how much you spend on your car.
I mean, cars, these are not assets. These things depreciate. As soon as you drive mom off the lot, 20% gone. How you spend your money in your, in your personal life. Drives in many ways your ability to be successful inside of your practice. And if you wanna come outta dental school and you have this pent up consumerism, I call it, where you're like, I've been eating Top Ramen my whole life, and now I wanna actually go drive, you know, a new BMW.
If you have that mentality and you just unleash on that spending, you are, you're gonna be pulling out every last dollar you can. It's like a sponge. You're just gonna be squeezing that thing and then you're not gonna have the water inside of your practice to really, really make a difference. So less is more.
If any of you have ever listened to Dave Ramsey, really a famous sort of, um, talk show host, he makes a statement. [01:24:00] If you follow him, you're gonna know what I'm about to say. But he says this, if you live like no one else, now later, you'll live like nobody else. So I'm not gonna explain that. Let it sink in.
Think about it. Less is more. Keep living like you're a dental student for a few extra years, to give you that space, that financial space, to hire these great people on the roster and then lead them. Give them a vision. Come into your office every day. You may, you may have issues going on at home. You may be feeling depressed or anxiety.
I get it. We're all human. I, I go through these things, but I'm telling you, as soon as I open the door, it is a smile and a positive attitude. And I, and I try to be as nurturing and caring, but also as direct and straightforward, but in a caring way as I can. You gotta lead that because all the culture, all of the feelings in that practice, all of the enthusiasm, it all originates with you.
And if you're cranky, if you're impatient, [01:25:00] if you're full of tension, that's gonna imbue the rest of the practice in the same thing. You gotta fix that. If that's a problem. People need to be inspired by you. Therefore, therefore, read. Read, train yourself. How do I be an inspiring leader? And a lot of it is just being excited about your own vision.
Be excited about your own vision. And a lot of this comes naturally. You don't need to read 10 books, but, but maybe some, but be inspired about your vision and let people feel that excitement. People should walk in and say, Dr. So-and-so makes me feel uplifted. Not Dr. So-and-so makes me feel uplifted on Monday.
And then by Friday he makes me feel terrible. Or, you never know what you're gonna get in the attitude of the doctor. I used to work a long time ago for a, a dental CPA who I never knew who I was getting. He would walk in the door and I'm like, am I gonna get the grumpy guy or am I gonna get the optimistic, excited guy?
And it was so erratic that it made it almost like an, an an [01:26:00] anxious place to work. And I hated that. And so being consistent, regardless of what's happening on the inside, emotionally, psychologically, you gotta, you gotta control that. And there's a little bit of like. Fake it till you make it. The truth is, is you have the ability to present something to people around you that may be inconsistent with how you're feeling on the inside.
You can show enthusiasm and and excitement even when on the inside you're suffering from some drama or some issue going on in your life, and it's hard. It's really hard to do that. But the beautiful thing about it is that when you do that, it leads to to good things during the day, and those good things lift you up, and that lifting you up helps you leave the office on a positive note, which helps you deal with the things in your personal life.
It's the circular reference. I feel like I'm blabbing. Sorry, everybody. Sometimes you know me. Doing these podcasts becomes one big monologue. I'm going on an hour and a half here. This was supposed to be 45 minutes, so ending off in this concept, [01:27:00] less is more. Really try to live on a disciplined, frugal life.
If you're a client of practice, CFO. You know, we, we go through a spending plan and then we deposit in your account what you need to live on, and then we try to keep in the practice the residual in order to reinvest and grow and pay off debt and build your net worth and grow your practice, and then periodically take out extra money for that trip to Hawaii or get your kids through college.
But at least it all has a design and an intentionality behind the traffic controlling of your dollar inside and then outside of your practice, less is more will give you freedom to build an amazing roster, which will take your practice from where it's today to being 10 x where it's today if done right.
Okay, in the next episode I'm gonna go into phase two, and if you recall, phase two is develop a personal plan for financial independence. So excited about that. Tune in for that episode coming out here in just a few days. [01:28:00] Until then, have a great.
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
PracticeCFO is in hundreds of dental offices around the country. They know what numbers should look like. They know what percentages of payroll, rent and supplies should be, and they will hold you accountable to those numbers, which will really help you stick to your plan and your path of growth and savings. That is invaluable
Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
I can’t say enough good things about everyone at PracticeCFO. Everyone on the team is professional, organized, knowledgeable, helpful and kind. They also respond to emails and phone calls immediately and are always happy to help. They have helped me navigate year-to-year as a business owner. PracticeCFO gives me peace of mind that my business is in good hands.
I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.
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