As dentists, you rely a lot on third-party insurance companies to help you run your practice. But as Robert Kiyosaki wrote in Rich Dad Poor Dad, “Today, doctors face financial challenges I wouldn’t wish on my worst enemy: Insurance companies taking control of the business.”
Whoever controls the money, controls the industry. It’s interesting that insurance companies dictate what dentists can charge for their services and if the services get denied or delayed for the patient
What Is Self-Reliance?
Self-reliance is the ability, commitment, and effort to provide the necessities of running a business. As a practice owner, you need to understand marketing, sales and case acceptance, finance, operations, and customer service in addition to your clinical work.
You shouldn’t depend on a third party to understand what makes each department successful. Once you understand what it takes to make each department successful, you can hire an employee or a third party to help manage it.
I have built multiple companies from scratch. But in my early days, I tried delegating too early to employees, which resulted in failed systems. No one cares about your practice as much as you do, and no one will do the grunt work to research, test, and organize each department in your practice.
Self-Reliance and Predictable Recurring Revenue
Managing money is a huge part of becoming self-reliant. It is important to have a budget for funds in your practices. Create a budget so you don’t overspend on certain supplies and resources. I enjoy creating percentage-based budgets so when the practice grows (or shrinks), you understand what you can afford.
The biggest secret to success and self-reliance is generating predictable recurring revenue for your practice. Recurring revenue helps practices smooth cash gaps. It also enables you to manage the practice with less stress
The best way to create recurring revenue in your practice is by creating an in-house membership program, which allows your patients to pay a yearly or monthly membership fee that is on autopay in exchange for discounts and benefits. This is an important strategy as you can cut out third party insurance companies and control your costs.
Generating recurring revenue also increases the value of your practice. As you grow your membership program, you will be able to generate a large amount of passive income or recurring revenue. Then, you will be able to sell your practice at a higher price when it comes time to move on from practicing dentistry.
According to John Warrilow, the author of Built to Sell and The Automatic Customer (I highly recommend both books), one of the most important things we can do for our businesses is to generate recurring revenue. He says businesses with a predictable recurring revenue stream are more likely to sell at a multiplied valuation than a discounted valuation of the practice. He also teaches us that businesses with recurring revenue streams can be sold between 24 and 60 times the monthly recurring revenue.
Generating recurring revenue through a membership program can be an important tool you can use to become more self-reliant. Imagine if you had a predictable revenue stream in your practice that you could rely on each month that generated $10,000, $20,000, or $70,000 a month. Would that change your life and how you run your practice?
I hope more and more dentists understand the importance of self-reliance. It is a trait that successful people often focus on developing. Self-reliance is so important in managing and growing your practice. I wish you the best as you go along your journey of practice ownership. Please feel free to reach out to me if you have comments or questions or want to chat about this topic.
Mr. Comstock is the founder & CEO of BoomCloud Apps, a software company that allows dental offices to create, organize, and automate an in-house membership program, reduce dependence on dental insurance and generate recurring revenue. For more information, schedule a live demo by calling (800) 260-9285 or emailing firstname.lastname@example.org. Or, download a free ebook about membership programs.