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How to Successfully Steer Your Dental Practice in Any Economy

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Written By: Tyson Steele

According to many experts, we are currently experiencing the greatest economic downturn since the Great Depression. In fact, many commentators are calling for the “end of prosperity” as we know it and the beginning of the Great Recession—including massive unemployment, the freezing of the banking system, and runaway taxation to hold it all together.

Although responses to these warnings range from disbelief to “holing up in Montana with a generator and small arsenal,” most economists suspect that we really do have a long road to recovery.

The Great Recession and Your Practice

Some of you have already felt the downturn. Many dentists in Florida, Arizona, Michigan, and California are experiencing their worst production year ever. On the other hand, some of you have felt little or no effect so far, but you still wonder if a monster is just around the bend.

No matter your particular situation, many dentists are asking the same question: What is the best strategy now to weather this economic storm?

Well, to answer that question, it might help to go back to the last big economic crisis . . .

The Great Depression: A Survival Guide for Financial Upheaval

In 1937, at the height of the Great Depression, one of the greatest financial books of this century was written. Based on written financial strategies dating back nearly 3,000 years, George S. Clason’s Gold Ahead provided great insight for those who desired to create wealth in a period of economic adversity. Clason postulated that although financial markets may rise and fall, the key to financial success remains a constant. In fact, the following principles, based on Clason’s research, will help you handle future financial worries with ease—whether from the Great Recession or any other looming adversity.

1. Act Now 

A long journey starts with a single step. Yet, many of us fail to take that first step, preferring to daydream of our future prosperity rather than take action today. 

Knowledge of these strategies is not enough. If you are to effectively handle economic adversity in any form, you must take small steps daily, starting now.

2. Eliminate Consumer Debt 

Make no mistake, those with a high amount of consumer debt will be most deeply affected during any economic downturn. Dentistry is the fourth most profitable profession in the United States. And yet, few dentists could go three months without income from their practice. Often, this is due to the high amount of consumer debt dentists carry. 

Imagine for a moment that you had no consumer debt—no credit cards, car payments, house payments, nothing. Could you handle a short-term drop in practice profits? Could you weather almost any economic adversity? 

Although you may not be able to eliminate a lot of debt before the end of the year, you should avoid adding debt. Also, look into consolidating debt, selling assets to pay off debt (boats, Jet Skis, cars, etc.), or any other ways you might reduce your debt burden this year. 

3. Start a “Rainy Day Fund”

Each time you take a draw, distribution, or salary check from your practice this year, immediately write yourself a check for one-tenth of that deposit. Place the money in a standard savings account and let it build. This will be your “rainy day fund”.

Do not pay anyone else until you have funded your rainy day fund. Your lifestyle will adjust automatically, and you will soon live comfortably on the remaining 90 percent of your normal earnings. 

By the end of the year, you should have at least one month’s earnings in your fund. If you’re frugal, this should sustain you through any short-term crisis. 

4. Beware of Get Rich Quick Schemes

Thanks to the current uncertainty about the future, dentists are being bombarded by many “get rich quick” schemes. If you read your junk mail, you’ll find outrageous claims that you can “make millions this year” in the stock market, real estate, and your dental practice. 

Don’t be fooled by these con artists. The fast track to wealth is littered with the bodies of their victims—people who thought there had to be an easier way, people who handed their hard-earned money over for a “secret” that isn’t worth the paper it’s printed on. Remember, if it sounds too good to be true, it often is! 

Weathering the financial storms of life requires more than a bottle of the latest snake oil cure. It takes a working knowledge of the fundamental keys to financial prosperity—no secrets, no miracles, just time-honored fundamentals.

5. Increase Your Practice Profit

Although no miracle cures exist, diligent efforts to consistently increase practice profit will pay off, providing you with an important financial cushion. Set reasonable goals, such as increasing profits 10 percent, and establish a plan of action. 

Your Best Defense Against Financial Chaos

Although no one can be certain when our economy will fully rebound or, for that matter, when it will crash again. The fact is that you never know when financial chaos might strike. By heeding the financial principles presented by George S. Clason during the Great Depression, you can protect your family and your practice from just about any adversity.

So, start now. And remember, your destiny is shaped not by knowledge, but by action.