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THINKING BUSINESS
a blog by Chris Barrow

Are you flying blind?



As I mentioned in a social media post last night - my Wednesday was spent working through no less than 9 sets of financial data, sent by clients for review and comment.


  • Calculating Key Performance Indicators (KPIs) and comparing them to benchmarks;

  • Calculating Operating Cost Per Surgery Per Day (OCPSPD) and comparing that to benchmark;

  • Looking at the impact of increasing wages on profitability;

  • Calculating the Average Daily Yield (ADY) of every fee-earner (gross revenue generated per day from either NHS delivery, private treatment sales or plan revenue);

  • Conducting the crucial analysis of the profitability of each individual fee-earner;

  • Establishing ADY targets for every fee-earner (as an alternative to the currently useless conversation around reducing percentages or moving to sliding scale - it's about production, not pay);

  • Analysing the profit contribution of each "product line" (a.k.a. treatment modality) and determining winners and losers in the product mix;

  • Calculating Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and using that to suggest a likely goodwill valuation for the business in current market conditions (and then looking at exit strategy);

  • Reviewing current prices and suggesting price increases to maintain target profit margins.


All of the above are the dental business equivalent of a pilot's instrument panel.


I have a simple question for you this morning........


Have you done the same?


Or are you flying blind?


Let me know if you need help. coachbarrow@me.com



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2 Comments


I'd love to know where Invisalign fits in...with lab fees approaching 2K now.

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Morning and Happy New Year - I'm currently working on an "Invisalign profitability calculator" in collaboration with a dental accountant - I've asked for this because so many of my clients have expressed concerns around the diminishing/vanishing profit margins in this area. Watch this space.

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