As a follow-up to episode 858 (Deciphering Your True Overhead), Tiff and Dana circle back to focus on managing your practice’s debt by knowing your PnL. They touch on how to interpret your numbers, considering whether the debt is worth it, healthy money ranges, and a ton more.
I’ve got Dana with me and today we are chatting a little bit more about money and I think this is this is a space where I’ve worked really hard over the last few years as a consultant to just get really good at because I feel like I knew money but not as well as I do today and I think it’s a space that we all can always get better at and Dana I love collabing with you and learning.
more from you as well because you have done a ton in the financial world yourself, family -wise, work -wise, all those pieces. So Dana, thanks for being here with me today and for always being my like, yep, I can podcast with you today. I, we say it every time we love podcasting together, but I truly love how flexible and easy you make it for me to get these in the schedule. So thank you. How are you today? I’m doing pretty good. It is
sunshiny and hot here in Arizona. And I think we’re so alike and are just like love of the sunshine. So it’s a fantastic day today. I agree. I agree. I every day this week, this this week has been I keep saying it’s like a Monday every day this week has been a Monday for me. Where I’m on my fifth Monday right now. So every day this week, I have made a point to make my little mushroom latte, scorching hot.
take it outside and sit on my back porch in the sun next to the water and just sit there. I’ve sat there for as long as I could. Today I only got to 10 minutes because it was a little toasty. It was 6 .45 and it was so hot. I was like getting sweaty. I’m like it’s 6 .45 a and I’m sweating outside. I must be in Phoenix. So it was toasty and then I looked at like the little thermometer. I came back inside, I looked at the little thermometer thing and it’s like 82 degrees or something. I was like, that’ll do it. Welcome to Phoenix.
Yeah, we do. We thrive on being outdoors, being in the sun, whatever it looks like. I think I love and hate the question, mountains or beach. Yeah. I truly don’t care. I truly don’t care. You want to, yeah. I’m like, both. Just put me, put me in the sun. Give me the outside inside question. Yeah, exactly. I love that. I love that. I’m actually going to change your question to outdoors indoors because it’s going to be outdoors no matter what that looks like. Yeah.
The Dental A Team (02:21.134)
I love that. I always say, I don’t know, maybe Tahoe, because I get water and I get mountains. Yeah. I can paddleboard in the mountains, but I love my desert. And I think you do too. I think we love where we live. Yeah. Okay. So it’s hot. It’s my fifth Monday, but it’s been a really good week though. It’s been a really great week. I think the whole team’s back. A lot of us were on the road or on vacation. Dana, you got to take vacation. I’m so happy for you.
Feel so like re -energized this week. Plug to my teams to remember my doctors to remember that time off is essential. Just make sure that it works with the whole team. But definitely make sure you’re doing that. So Dana, first week back, it’s been crazy. You’ve had a million calls. I was looking at your schedule and I’m like, holy million calls this week. I thought it was just me, but it was all of us. And you decided to podcast with us today. So thank you. The Dental A Team listeners appreciate you being here. You get a ton of great feedback on all of your stuff.
We’ve talked a little bit recently about P &Ls and budgeting. And we talked about what kind of percentages and what that might look like and how to create some budgets. But this time, I wanted to deep dive a little bit further. Last time we kind of skimmed it. We talked about what true overhead is. And remember, you guys, if you remember, if you haven’t listened to it, you don’t have to listen to it before this one, but you should listen to the other one as well.
about true overhead and budgeting because I think they’re going to go together really well. So remember that your true overhead is anything that if someone were to purchase your practice, this is the overhead that they would be purchasing with that practice, right? This is what they could expect to inherit. So it does not include your doctor pay and it does not include your debt services. So today I really wanted to talk about the idea of managing debt
by knowing your P &L and looking at your P &L. That’s something, Dana, I said I’ve worked really hard on my money mindset and our knowledge and my business knowledge for my clients and getting better and better at that. I think we’re all getting better every year, but I know that’s something that you and I both have worked on really hard with a few of our clients this year that have really just kind of gotten upside down in some debt situations. And so I wanna pick your brain a little bit today. You’ve had one.
The Dental A Team (04:44.333)
Very recently, actually, that I struggled with maintaining their overhead, getting their overhead down. But then their debt on top of the high overhead was just, they were drowning. They were seriously drowning. And I know you helped them to at least identify it and start chunking away based on that. So what were some of the steps that you took them through with really just even understanding their P &L so that they knew where their money was going?
Honestly, tip the very first step was getting them to look at it. Right? Like they have a CPA who sends in their PNL every month who but getting them to really take a look at it because for a lot of practice owners that is scary. Right? Like being responsible for team members and responsible for a business and keeping doors open and keeping people’s jobs. Seeing real numbers in front of them can be stressful and scary. So it was getting them to look at them consistently was piece number one.
Yeah. The next piece was just getting them to understand what it was telling them and what all of their expenses were and where to kind of categorize them. And we did talk about this in a previous podcast, but things that are personal things that are taken through and itemized in different ways, learning what they are, learning where they should go. And
where their debt services are, all of their debt services, and then just getting them to make smart decisions based on those numbers because we can on a whim and a prayer hope that we can afford that scanner, right? But if we’ve got real numbers in front of us that tell us we can confidently make better decisions. Yeah, totally. I love that. I love that you said number one, you have to look at it. I think that’s the biggest piece. I have so many practices that
Well, number one, doctors, we know and understand what school looked like for you, as in you didn’t have any business, really like business training. I think that I think I had a doctor tell me once they had like one semester of like business training that really wasn’t anything applicable. So I get it. And that’s what we’re here for. That’s why you hire people who know those things so that they can teach you and guide you. Now, I love that you said, look at your PNL.
The Dental A Team (07:07.725)
Now, I think this is huge for a couple of reasons because Dental A Team is a consulting company and we love what we do. We love our clients. We love the non -clients. We love everyone in the dental community. And I think one of the biggest things that we set out to do that could be different, I have no idea, than other companies out there, but we really want to teach you how to do this on your own. I don’t want to be the person that has to do it all the time.
for you because other than it’s kind of like, I think of it like my husband doing my checkbook register, like my husband managing the money, right? I have no idea what that looks like. So then when I need to make a decision, I might make a decision on a whim or not even make a choice or a decision because I don’t know. And so it could be very stressful to me because
he’s got full control or he’s, you know, he’s the one that makes all those decisions. So it kind of makes me feel like that where if we’re leaning on our, our consultants or our CPAs or our bookkeepers fully for that knowledge and that information, you sometimes I think are in the dark and will make poor judgment decisions. So we always want our clients to walk away from our financial conversations, feeling confident in the information that they’ve gotten and feeling confident that next month.
you might be able to walk me through your P &L so that I’m not always the one doing it. I want you to learn how to do it as well because as much as I love you and I have worked with many of my clients for five plus years, so I am here for a lifetime, we’re all here forever, but I don’t want you to need me. I want you to know how to do this stuff on your own. So I love that you said that. Number one, pull it up. And I think unlike,
the personal side of money mindset and like financial awareness and any financial podcast you ever listen to, right? They’re like, number one thing, look at your bank account every morning. Know what your money looks like. So guys, like pull your PNL, know what that looks like, read through it. Even if you can’t read it yet, even if you’re like, I don’t know what these numbers mean, don’t shy away from looking at it.
The Dental A Team (09:17.933)
Because the more you look at it, the more you’ll start to understand and gather on your own. And the more questions will come up that you can then ask the professionals who do know. So I love that. Look at it. Number one. Now, Dana, I’m going to stay there for a second because I know that it, that this specific client, I think you’ve actually had a couple and I know I’ve had a couple too, that it was like, they were so afraid of looking at money, but they were so afraid of debt and afraid of money.
that they wouldn’t look at it. So what did you do? How did you coach them through that and get them to a point where they could look at it without anxiety? Like I know it’s anxiety inducing for some people. How did you help them get through that? It was just walking them through and building the confidence that when you know your money, right, you can control your money. And so when you
don’t know and you don’t know what the pieces are, you don’t know what’s coming in, you don’t know what’s going out, you can’t make decisions. And so when you know it, you can own it. And you can fix things. And your piano and your money will always tell you a story. And so once you know what that is, then you get to own it and you get to make it better. But when we
I’m sure you’ve done this right at one point. You’re just like, gosh, I didn’t even know what’s in my bank account. Like I hope to gosh, the Starbucks will go through and it’s a finger in a prayer and a flute, right? Where have you checked your bank account before you went out? You might not have bought this before you bought that Starbucks if you really wanted the Starbucks. So it just helps. It’s just giving them the confidence that the numbers may be scary and they may not be great when we look at them. But what it does is it allows you to take back control.
and get your way out of it. Figure out your map to move forward. I totally agree. I love that you brought that control in there because that hit, that hit hard. I hope everybody felt that hit. When you’re allowing your money to control you, it’s a very different space of life than you learning how to control your money. So I love that. So looking at the P &L, learning your P &L and understanding it, I think this podcast today, I wanted it to be about how to manage your debt using your P &L, right?
The Dental A Team (11:35.437)
So number one, Dana’s talking about knowing your money. Where is your money going, number one? Listen to the budgeting and true overhead podcast. That budgeting is gonna help you manage your debt a ton. But I think secondary to that is really being able to see within your overhead, what can you change or manipulate to help you pay down some of the debt that you have. When we talked on the last podcast about the budgeting and true overhead, we broke down.
your top of your spreadsheet, right? We take your P &L and we put it into an overhead spreadsheet. And which, these are available if you guys want them, email Hello @ TheDentalATeam .com, okay? So we take it and we put it in this overhead spreadsheet. So the top of that spreadsheet is your true overhead. This is what somebody would be taking over if they were to purchase your practice. That tells us this is how much money we have left over at the end of the month. Your goal there is 50 % or less, okay? Typically the range I’m seeing GP practices in is 55 to 65%.
Okay, 55 is still pretty healthy. Okay, 65 is like, okay, we can get you to a healthy spot. That’s like a yellow for me. Anything, 65 and above is like a red. 65 to 65 is like a yellow, and then anything 55 under is like a green for me. So if we’re in that yellow space, whatever. So now we can see, okay, this is where I’m at. I’m in a yellow, I’m in a red, I’m in a green. And now we say, okay, this is how much I paid myself that month, and then.
this is how much debt services were that month, and at the end of it, this is how much money I had. Now, I’ve had practices that we got to the end, and it was like a negative 9 % I saw one month on a practice. And he goes, that’s why I had to go into my savings. That’s why I don’t have any money in my account. I’m like, exactly, exactly. But when we’re not breaking it down, when we’re just paying things because we need to pay them, when we’re just buying things because we need
quote unquote, to buy, we need to buy them, we don’t know that we’re actually negative until we look back later and we’re like, shoot, but if we’re projecting and we’re planning for it, we can see why were we negative. So that specific doctor, what I did is I have, and I have a lot of my practices doing this so that we can manage the debt is I have a different portion on that spreadsheet that says the debt, right? Who’s the debt 02? What’s the origin date?
The Dental A Team (13:58.861)
What is the amount that we’re paying and what’s the projected payoff date? So I know how long do I have to keep this in the spreadsheet and can we pay this off earlier? Can we allocate funds to pay this down earlier? So then it adds it up for me and I can see X amount, $10 ,000 a month is going to debt services. It’ll plug it into my spreadsheet right away. So I know.
Every month, at least $10 ,000 is going there. Now, if I can’t change that $10 ,000 that cannot be reduced in any way, I’m going to look, if I’m struggling to pay that debt or my practices, right? I’m going to look at your overhead. And Dana, you did this like budgeting conversation on the previous podcast so perfectly. Cause you’re going to look and see, are there areas that I could reduce my true overhead to allocate some more money?
down below to pay off some of that debt. And I think, Dana, that’s just a way to be able to manipulate your money. And like you said, control your money instead of your money controlling you because it’s so stressful when you’re like, where this specific doctor was like, where Tiff, where is my money? I’m like, I don’t know. What are you buying? Like, where? I don’t know. And then, you know, two weeks later is like, can I buy a scanner? And I’m like, no.
You don’t even know where your money is. This is where your money is, right? So I think that’s just an easy way to do it. Now, Dana, where have you seen with these practices where you’re like, let’s look at your money, your true overhead is a little high, but maybe you’ve even seen their debt is too high. What do you do then with those practices to really help them start managing that debt within those P &Ls and those overhead spreadsheets?
Yeah, I think for some form of it is what we talked about prior, which is, can I budget the things that are above the line to leave more money to offset what is below the line one, and then to I look at each debt service right now, practice loan, we’ve got to have that. Okay. But the next debt services, are we utilizing the thing that we’re paying for? I like is this even need to be a debt service for or can we sell it or get rid of it or utilize it more to make it worth what
The Dental A Team (16:15.597)
it costs in debt services. And then if we’ve got extra money, is there a debt service down here that if we paid off now would allow you to do something else that boosts the business? Yeah, brilliant. I love that you just said, I wrote it down, evaluate your debt. Is it worth the money that you’re spending? I think that happens a lot with scanners and mills and all of the things I think.
I think practices are getting much better at utilizing scanners for the new patient exams and all of those things and full mouth scans. But a lot of practices aren’t. And I know two years ago when these things really started like making a wave in dentistry, they weren’t using them. And they’re spending thousands of dollars every month on the scanner that’s sitting there collecting dust. And at that point, if it’s not something that you’re truly going to put into practice, why are we paying for it? It’d be like paying for a car that sits in your garage.
but you’re upside down and can barely buy your groceries, why is the car still sitting in your garage? Sell the car. You would sell the car. So why is the scanner still sitting there if that’s not something you’re truly gonna implement? Maybe it’s not something you’re ready to implement, whatever the thing is, right? It doesn’t have to be that. It could be a CBCT and you’re like, gosh dang it, I’m never gonna do root canals that I need this for. You know what, I actually hate placing implants. Is the CBCT worth it in your practice then? Is it paying for itself or is that something that you might be able to sell?
and recoup some money or at least pay down the debt that you owed on it. I think that’s brilliant. I think that’s brilliant. So today’s podcast is all about using your P &L to manage your debt. And I think number one, Dana, the first thing you said was look at your P &L. So then look at your P &L, know your P &L, look at your overhead percentages, and then look at your debt. You guys write out all of the debt that you have. What are all the payments you’re making every single month? Where’s the money going?
And then let’s look at where can we allocate more money? And you guys, I’m going to go ahead and point this out. It doesn’t have to be upside down for you to do these things right now. You could be in a really healthy space where you are making 20 % profit or 22 % profit, but you’re still like, I still have debt and I don’t like that. Then let’s start paying it down. Let’s start looking where.
The Dental A Team (18:33.709)
where you can allocate more money. So obviously, if you’re more profitable on the business side, you can pull money from your profit and pay debt down sooner. That’s an obvious one. My caveat there is just to make sure that you do have cash reserves on the side to ensure that you’re taken care of there. The reason that I say that, my number one reason for saying that is pandemic, okay? We know what that looked like. And if there’s ever a space or you know what, if you…
Next month’s production and collections is just ugly, but we still have to pay people. We want to make sure that we can pay people without having to take out a loan to pay our employees. So don’t pay off loans to put yourself in a space where you have to take out money later. Make sure you’ve got those reserves on the side, but then start looking, okay, what if I only had 15 % profitability in my practice? So 15 % of my…
collections is going into my reserves, my bank accounts. But now I can allocate another 5 % to 7 % for a 20, 22%. I can allocate that 5 % to 7 % back into debt. So then I think, Dana, and this is going to pull on your personal knowledge, I would think then you would look and tell them, correct me if I’m wrong, you would then look at the debt that is costing you the most. So what’s got the highest percentage rate?
What’s maybe they’re going to take the longest to pay off the most monthly payments? Like what’s harming you the most Dana? Is that how you would you would tell? I was gonna say patience you tell your clients to to work it off. Yeah, absolutely I want them to start with those things because again most of our debt services come with some sort of interest so the quicker you can pay down those with either longer terms or higher interest the more your money starts working for you. Yeah. Yeah, perfect. I love that.
I love that, okay, so whether you’re in a negative percentage rate on your, or a negative percentage on your profit, or whether you’re positive on your profit, I think today is always a great time to look at your debt services. I have had a lot of clients that just, like Dana said, just looking at the numbers, just pulling the information and knowing where your money is going, I’ve seen a lot of clients really be able to pay off debt years before they thought they were going to be able to because their money,
The Dental A Team (20:54.605)
started working for them. They were more in control of the money and they could see where it needed to go instead of just sending it where they thought it should go. They could really see, okay, it makes more sense to do this. And one of my clients, I’ve talked about them before that, I mean, we turned around their money in their practice where they were like, they were taking loans to pay loans. And we turned that around for them really by just looking at
where the money was going and making more educated decisions on new loans. So now we discuss it as a team, you know, me, wife and doctor, we discuss it as a team of what would it look like if we were to add this debt. And super fun plug, they’re one of my, they’re my,
that I spent the most time digging into this with. So I pull on them when we talk about this stuff, but most of my clients, I’m working on this stuff with them. But these guys just had like the biggest transformation. And I hope they listen to this and I hope they know who they are and how much I just adore and love them and love working with them and how fantastic it felt to watch them completely change their lives. Like the stress, you could see the stress and he still works his tail off. We’re working on that.
So he still got a lot of stress, but they weren’t, they’re no longer stressing about money and watching that dissolve for them. I saw both of them just become happier people. They, they just, they both like stand a little taller. they’re excited for their futures. They bought a beach house personally, because they could see that personally, they no longer needed to finance the practice. The practice was running itself and.
The money was there. And so my biggest, and I think Dental A Team in general, and Dana, I know you operate this way too. My biggest goal as a dental consultant with Dental A Team is that we can get your practice working for you. Instead of you working for your practice, your practice should support an exceptional personal life. You should be able to do all of the things that you dream of. You should be able to have all of the amazing things that you want as a business owner.
The Dental A Team (23:11.373)
We just have to do these pieces in order to get your practice working for you. So those are, I mean, it’s incredible. Dana, have you, I know it makes me emotional thinking about them, right? And I’ve had a few clients, but like in there, like my most recent and the biggest one, but I know earlier on we spoke about clients that wouldn’t, you know, look at their P &Ls and I know you’ve worked with a lot of clients recently on having to manage debt. What has that been like for you as a consultant?
how did that feel for you to be able to help them with that? And then for them, how did you see their lives transformed just learning to look at their money? Yeah, I mean, it’s been huge being able to have these discussions and being able to show clients like what their numbers tell them where they can make changes that have big impacts is huge. And the biggest thing that I think I see is just like their decision making confidence, right? If you look at your numbers, you will always know if you can give a team member a raise.
If you look at those numbers, you will always know if you can buy the supply or take the course or do the thing that you want to do. And then once you get that honed in and you’re able to pay down the debt, usually every time I do an intake call with a client or their first call, it’s like, okay, what can we do personally? And so often it’s work life balance. And we can think that that’s
delegation and we can think that that’s like our scent, but truly it is the confidence and the profitability of the practice that allows them to do the outside things that create that work life balance. Totally agree. I totally agree. I love that. I think that’s like drop the mic. That’s the rap. That’s the thing. So change your lives, change, change your money, change your lives, like pay attention to your money, change your life. And I think that’s personal and professional.
And I think all of us can use those tips and those reminders. So when you’re working to manage your debt using your P &L, number one, look at your P &L. Look at it every month. Look at your bank accounts throughout the month. Make sure that the deposits that you’re seeing in your operating software match or are close to. Just know that your cash and your checks will always match a spot on, but your credit card’s in your.
The Dental A Team (25:23.181)
things like that will look a little different, but make sure that those deposits match, that they’re making sense. Watch your money, watch how it’s coming in and watch how it’s going out. And then Dana, you said understand the categories on your P &L, understand what they mean and how you can manipulate them. And then making smart decisions, evaluating your debt, is it worth keeping? So look at your P &L, pull your debt.
information like how much debt do you have? What are those monthly payments look like? Add that into your monthly budget and figure out is there anything within that that you can change to pay off that debt any quicker because any debt is bad debt. Just get rid of it if you can, but ensure your company is profitable in those ways. So go pull your P &Ls, look at them, learn them, reach out if you guys need help. Hello @ TheDentalATeam .com. We are here.
told you today multiple times, we help clients with this every single day and we love it. We have learned so much ourselves in this realm and being able to help manipulate the money within the practice to work for you. And for the team, this is something all of our clients are very passionate about is reinvesting back into their team. This is how we get there. We have to make sure that the P &L and the debt management make sense before we can reinvest back into the company and the team. So this is how we do it.
Dana, thank you so much. This was a really applicable one and I know you’ve worked really hard with your clients. So kudos to you. You’re an incredible consultant, you’re an incredible team coach and you really change lives every single day. I get to watch that from my position within the company and I get to see that come back from our clients and the clients that you touch the lives of. So keep doing what you’re doing, keep growing, keep learning and keep.
teaching all of the valuable things that you have. Thank you for being here today, Dana. All right. Everyone, go re -listen to this. There’s a lot of things in there for you guys to pick up and take notes on. Reach out, Hello @ TheDentalATeam .com. As always, leave us a five star review below. Tell us how much you loved this and we can’t wait to catch you next time. See you later.
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