Check your mirrors for financial blind spots
I founded PracticeCFO a little over two years ago with the mission of helping private practice owners fight the uphill battle of achieving financial independence. By providing our clients a full 360-degree panoramic x-ray of their practice and personal financial health, we empower them to navigate the complex road towards financial freedom. Every now and again, I’m reminded of the importance of our mission and want to share with you a story which epitomizes our firm’s goals.
About a month ago, I backed into my wife’s new 2016 Honda Pilot. After the impact, I leaped out of my car and made sure no one was hurt. Luckily, no one was. My wife’s Pilot was parked with no one in it. Then I did as any rational husband would do…I blamed my wife. After all she did park two feet on my side of the driveway! In hindsight, I can assess it more logically and you’ll be happy to know that I’ve come to my senses. The blame is on me, not my wife. She was only parked there for a few minutes and did not know I’d be coming home.
And some good has even come from the matter too. Since then, I’ve been determined to look in all mirrors when backing up, even in the most routine circumstances. By doing so I can identify where all the risks are, where I might be approaching a crash, where I could potentially be out another $5,000, and even where I could mistakenly blame someone for my own mistakes.
I believe there are financial lessons we can all draw from this experience. We need to constantly check our financial blind spots even when… rather… especially when we are caught up in the routine of life and operating on autopilot. As practice owners, or aspiring owners, we tend to devote the majority of our attention to one thing. For most, it’s giving our patients a positive experience via excellent clinical outcomes and that goal consumes 95% of our energy and time. We believe that if we focus our attention on the clinical side of dentistry it will translate into happy patients which will translate into a successful business. After all, that is a cornerstone of Dental school curriculum.
Well that belief is only partially true, and partial truths can (and often do) lead to undesired outcomes. A happy patient population is just the start. It is only one side‐view mirror on our practice and if we’re only looking at that mirror, we’re invariably going to miss some financial blind spots. Neglecting the other mirrors of our practice can in turn damage our financial plan, retirement goals, and even our relationships… and what’s worst of all, our financial pitfalls will hinder our ability to practice quality dentistry and satisfy our patients!
So what mirrors should you be looking at when running your practice? To name a few:
1. Defining your personal financial goals
2. Integrating those financial goals with your practice goals
3. Managing your tax liability and overhead
4. Reducing your debt structure
5. Enhancing your technology
6. Protecting yourself through proper insurance coverage
7. Developing and monitoring your marketing approach
8. Motivating and managing your staff
If understood and managed properly, each of these “mirrors” can identify financial risks to the success of your practice. They can strengthen your financial position, both in your practice and in your personal life. But these mirrors require your attention. They require a certain level of knowledge to manage successfully. That’s why we’re now authoring the PracticeCFO newsletter and blogs. To provide you with education, trends, benchmarks, and stories ‐ all intended to give you additional mirrors to manage the risks and opportunities you face. And perhaps help you accelerate your financial independence, even if in a small way.
Wesley Read, CPA, CFP®
13400 Sabre Springs Pkwy Ste 255
San Diego CA 92128
P: 800 675-2712
F: 858 251-0015