There is a phrase that summarizes the plight of the average dentist. It is the “I think I should drive the same car as a hip-hop music mogul because I am a dentist” effect. This phrase comes in part from a TV commercial, but also has a level of application to most dentists I have ever met. In the commercial, the wife is pressing the remote to unlock the doors of a beautiful 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. Maybe I should have just entitled this article “I think I should drive the same car as a hip-hop music mogul because I am a dentist”, but there is a little more to it than that.
In dentistry, the story is a little different in that the doctor has actually purchased “the car” (basically you could insert anything you want here). 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. Instant gratification and entitlement can destroy your career and family. Buyers beware.
These actions and this financial attitude had to start somewhere. Perhaps it was just a myth perpetrated in dental school. Maybe it was the article in the paper or magazine boldly stating 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 fundamentally the attitude that you deserve the best things in life, now. 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. The trick is choosing wisely” (another “Michaelism”).
You graduate from dental school with the expectations that you can demand 35% commission on production as an associate when the average practice has an overhead of 67%-75%. With the added expense of hiring an associate, extra assistant, and the needed equipment, the senior doctor is way upside down financially to hire someone at that rate. At least 90% of senior doctors bringing in an associate are clueless to the business of dentistry and growth strategies. With 83% 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 even borrow for living expenses with the idea of paying it back latter 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 $350,000 to $500,000 for the four years of Dental School. As an afterthought, you decide it would be a great idea to date another dental student and get married to up that total to just under $1,000,000.
Think back now 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 seventies, 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 if you don’t plan wisely and understand that “debt is the tax on future earnings” (another “Michaelism”).
What about the real estate broker who befriended you in order to secure that prime lot for the new office at a piddling $22 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 to $80,000 for a year-long 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 sort 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 ghost writer pen another next million-dollar practice book and passing them out free. How gullible can we be? From my perspective, pretty gullible.
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 doctors who have practiced for 30 years or more, and everything in between. You won’t read about them or hear them on the stage, because 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 to or arrived at a debt free existence by producing more, collecting all of it, and keeping half (it should be a Michaelism, but it is all Max). 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.
At the end of every article I have penned, you will find my name, cell number, and email. Give me a call or send me a text or an email and let me help you make decisions in your practice that will re-write your financial future. It costs nothing but the time to make the call. I look forward to hearing from you.
Michael Abernathy DDS
972.523.4660 cell
[email protected]