The "I Think I Drive the Same Car as a Hip Hop Music Mogul Because I am a Dentist" Effect
The title comes from a commercial on TV, but also has a level of application to most dentists I have met. In the commercial the wife is pressing her remote for the door locks at a Rolls Royce while asking her husband why it won’t open. His answer is that they drive the 5 year-old station wagon in the next row.
In dentistry, the story is a little different in that the doctor has actually purchased the luxury car. Let me rephrase that: The bank has loaned the doctor the money or the leasing company has extended credit for a lease so the doctor can drive that type of car. It is rare indeed to find doctors who live within their means, much less below their means so that they could someday retire with dignity and with a secure financial future. It had to start somewhere. Perhaps it was just a myth perpetrated in dental school. Maybe it was the article in the paper that quantified the fact that: Dentists now make more than your family physician. Who knows? But somehow our dental community has created the illusion that we can afford everything we want. It is true that we will produce millions during our careers, but it is also true that more than 95% of us will fall short of financial independence. If we plan our careers and practices correctly, we can afford just about anything we want, but we can’t afford everything we want.
You graduate from dental school with the expectation that you can demand 30% commission of production as an associate when the average practice has an overhead of 67% – 75%. With the added expense of an associate plus the necessary equipment, the senior doctor is way upside down financially to hire someone at that rate. With 93% of all associates leaving within 24 months, we embark on our dental quest to create our own financial freedom. Statistically you will fail.
It starts before you even begin dental school. The Federal Government has an entire Student Loan division to help you afford the education that you have qualified for. You don’t even have to work during school. They make it easy to borrow living expenses with the idea of paying it back later when you are rolling in the money. If you’re like most of today’s dental graduates, you did a great job of limiting your borrowing to just $250,000 – $350,000 for the four years of Dental School. As an afterthought, you decide it would be a great idea to date another dental student. Then you get married to up that to the $500,000+ area.
Think back about your best friend in dental school. No, not the student sitting next to you in class but the dental rep from your local supply house that has the patience of Job while he waits for all of his hard work to turn into gold in the form of commissions when he sells you 3 times the amount of equipment you can afford or need at a later date. In my sixties, I am amazed at how many times these people have turned back up in my career to save the day by selling me more and more.
Do you remember the nationwide banking group who bent over backward to secure that needed financing for you to get into that first office? These guys were pretty friendly also. I can still hear them say: “Everybody does it. You’ve got to spend money to make money. This will seem like nothing when you look back”. It was nothing. It meant you would never have anything left over. You will have nothing left for the future.
What about the real estate broker who befriended you in order to secure that prime lot for the new office at a piddling $12 a square foot? Add in the persistent dental supply guy, the benevolent builder, the ever present banker and you continue to spiral out of control toward no choices and no money saved.
Now you reach out to the Dental consultant who promises you the world and only delivers an invoice. For a mere $50,000 – $80,000 for a year contract they will show up at your practice for a 2 day visit and allow you to listen in to their deeply guarded secrets for practice success over the phone once a month during the year followed by a 30 minute call from a roofer turned consultant every other week. You know the group with the charismatic doctor who had a mediocre practice, or the MBA who got his degree for $10 from a mail order mill, or the marketing guru who makes all sorts of claims to be able to turn around your struggling practice with the newest, optimized, never before offered secret gorilla marketing what-cha-ma-call-it. How about the washed up CPA or banker turned Dental speaker with a new financial plan to beat the market. The worst is the motivational ex-corporate lackey that is going to bring a new slant to motivation and profitability to dentistry after having a ghostwriter pen another next million dollar practice book and passing them out free. How gullible can we be?
Add a spouse that spends like there is no tomorrow and you are in the twilight zone of mediocrity. You are the 95% that will never have choices and never be financially independent.
There is some good news. Every day, all over the country, dentists are having their best month ever. Not just the best month this year or this month compared to last year at this time, but the best month in their entire career. We are seeing this with startup practices and with doctors who have practiced for 30 years or more. You won’t read about them or hear them on the stage, but they are quietly taking their success to the bank. They practice down the street from you with the same demographics, poor economy, and challenges in attracting and keeping staff and patients. They are moving toward or have already arrived at a debt free existence by producing more, collecting all of it, and keeping half. They run their practices by the numbers, with benchmarks and budgets. They save and control their personal spending. They begin with the end in mind, and that end includes a life of choices and financial independence.
We would like to help you get there. We will need 3 things from you:
1. Complete our two page Growth Strategy Analysis spreadsheet;
2. A current Profit and Loss statement (P&L)
3. Copies of the practice schedule from a recent 3-4 day period
Simply give me a call or send me an email and I’ll get the spreadsheet to you right away. After you return everything, I’ll spend a whatever time it takes with you on a phone call, helping you diagnose what is holding you back. I will give you solutions to each problem and if need be, we can help you implement the necessary changes in your practice. Let’s change the direction of your future.
Michael Abernathy, DDS