Managing Director of Medifinance, Ray Cox, explains how well planned funding can help maintain vital cashflow and secure the future of your practice

Over the last few years we have witnessed some significantly influential politicians, of all persuasions, demonstrate that they have little, or no, grasp of the fundamentals of commerce. It's hardly surprising though when you take into account that they have no business experience, and they operate within a political system that favours short term expediency rather than longer term sustainability.

As a result, some fairly daft ideas have been mooted and, sadly, some implemented. Promises are easily made but easily broken and for businesses to prosper consistency is essential. There will always be economic ups and downs, but business needs to be financially robust enough to withstand these.

Politicians aren't helping. But I was listening to a very wise financier the other day whose thoughts ARE helpful and well worth passing on.

Essentially his message is this:

A healthy business is one that which has, or has access to, sufficient funding to meet its expenses, support its ongoing growth and steer it to produce a profitable return. The challenges experienced in recent years have been tough and have shown business owners just how vital maintaining cashflows are to securing their futures. And businesses cannot stand still. They need to invest to grow. To do so, in most instances, requires external finance as a positive tool

Differentiating bad debt and good debt

• Growing a business often requires substantial up front investment. Using external funding allows you to spread costs over time and maintain your essential liquidity
• Investing in growth opportunities such as new techniques and technology may take years. Accessing external funds can help you capitalise on time sensitive opportunities and gain a competitive edge
• External finance can help fund equipment upgrades and process improvements which will enhance operational efficiency. The ability to scale up without waiting for internal funds can boost productivity and profitability
• Whether you need to invest in marketing, open new practices or expand your on line presence, funding will help you reach new patients more quickly, leading to increased sales and economies of scale
• If you have more capital at the ready you may be able to purchase at better rates and/or take advantage of early payment schemes that will improve your margins 
• Unlike equity funding where you may have to give up ownership stakes and/or control to investors, borrowing allows you to keep full control 
• Taking on external finance and responsibly managing repayments can help establish and improve your practice's credit score. This may well make it easier to access larger amounts in the future and on better terms

Plan to grow

Sourcing funding to support business growth is a strategic tool when used wisely. It can enable faster growth, greater efficiency and help create new opportunities whilst you maintain ownership. The key is to assess the ability of your business to repay the facility and ensure that any investment leads to a positive return and sustainable growth

In order to help you with this assessment we have prepared a business and financial plan template that is available, free of charge and on request. Please contact me (details below) if you would like a copy.

My final piece of advice is not to be discouraged when the economic climate is difficult. There always have been uncertainties and there always will be.With a well thought through plan and reliable and informed advisers you are well equipped to weather any storm!

Managing Director of Medifinance, Ray Cox, explains the importance of presenting an evidence-based case when seeking funding.

I'm sure you've heard the saying that banks lend money only to people who don't need it. Which at face value seems both contradictory and faintly ridiculous.But a cautionary tale highlights why perhaps there is more than a germ of truth lying there.

I was talking to a particularly successful practice owner recently who was looking to expand. His business was certainly profitable, and he had never experienced any significant difficulty in finding funding as and when needed. Essentially, he considered himself and his business to be 'a good risk' and that his relationship with his bank would stand him in good stead. This would, almost certainly, have been the case when that relationship was effectively between him and the Bank Manager, but things are different now. Firstly, he had to establish the right person within the bank to whom the funding application should be submitted and having done that send in his written plan for 'consideration'.He was not given any guidance by the Bank on what the plan should cover, but he felt he could put together a proposal that would produce a positive response.

Much to his amazement he was turned down flat. Why?Because, successful as his business was (and is!), he did not present an evidence-based case for funding. He made the assumption that a detailed, costed and realistic business plan was not necessary.

He was wrong.

How to prepare a plan that will give you every chance of sourcing the funding you need

Of course, rules are there to be broken and a good few entrepreneurs break them and still the profits roll in. But for we mere mortals, it makes sense to understand from the start that to run a successful business and maintain that success depends on one key factor…..being and staying informed.

This means you will run your business in a business-like manner. It also means that when you need funding the lender appreciates that your case is based on reality rather than speculation. 

• Above all, monthly management accounts will demonstrate you keep your finger on the pulse. It will immediately convince the lender that you have the level of commitment required to run a business responsibly. Quite simply, it is not being run well unless it consistently monitors its costs, its profits, its losses and its cashflow.
• It always pays to have a good team of advisers that understand their roles and can lend authenticity and credibility to your business plan. An accountant with experience of the profession is a given, but, depending on circumstances and resources, you may add legal, marketing and financial advising expertise to your team.
• Indicate your ability to delegate and put in place the reporting procedures that allow you to assess and implement the information provided
• Be absolutely honest about the costs involved and the resources required to implement your plan. Do your research diligently and demonstrate you have done it. Do not attempt to ignore potential problems in the hope that 'something will turn up'. It rarely does!
• As appropriate, support your application with evidence of your financial track record and management eg:
  - Loan repayments
  - Credit rating
  - Credit control
  - Management and control of overheads
  - Cashflow
  - Salaries, bonuses and pensions policy
  - Assets

If your business plan meets the above criteria, your application for funding will, without doubt, result in a positive outcome. It may require a little extra effort, but the longer-term rewards will more than justify the time it takes.

Managing Director of Medifinance, Ray Cox, believes that a review of the way a practice is equipped may pay unexpected dividends.

On the basis that you get what you pay for what best describes our treatment equipment strategy?

What is our policy for looking at providing additional/new treatments that could potentially increase revenue?

When a new client walks into our practice what might be their first impression?

• Friendliness
• Signing
• Parking
• Waiting area facilities and comfort
• Overall décor, tidiness and cleanliness throughout the practice
  
• Waiting time
  

As a practice are we investing in a working environment that not only helps us retain staff but also aids recruitment?

Do we try and stay ahead of our competitors?

To Sum up

 Ray Cox, Managing Director of Medifinance , feels that in the current economic climate, a review of practice loan arrangements could be a wise and financially beneficial decision.

Why you may well benefit from refinancing

• Is it possible that loans taken out when rates were at their peak could be replaced by loans offering better rates, terms and conditions?
• Have our needs changed and/or would we benefit, right now, from an injection of capital?
• Is our loan portfolio complicated and difficult to track and administer?
• Are our longer-term loan prospects perhaps being jeopardised by being seen to be too exposed to a plethora of current loan agreements?

The factors you should consider

• Are you on course to meet your long-term goals and if not, what is holding up progress?
• What short term and/or immediate requirements are causing problems and could an injection of funding, that does not impact negatively on cash flow, be helpful?
• Is cash flow a problem if so what steps are being taken to address and overcome it?
• Do we need to up our level of investment in the practice to keep ahead of the game and remain competitive?

A suggestion

Ray Cox, Managing Director of Medifinance, reviews the real opportunities and the advice and help available for dentists looking to start up their own practice

Translating positive thoughts into positive action.

If you go online there are vast amounts of advice on the values of positive thinking and sharing that positive thinking with others. It's well worth reading. As is attending motivational courses by many of the highly qualified and experienced dental business gurus. But the point that B emphasised was that you need to have a clear and realistic business plan in place from an early stage or positive thinking will remain just that.

Later in the day I asked B to talk a little more about the steps he took to put in place a plan that would make his dream a reality. What I found both reassuring and impressive was that his suggestions were not some combination of 'marketing speak' and techno jargon but rather a set of sensible disciplines that are simple to understand and implement.

I found myself nodding along. I hope you will too. 

1. Talk with colleagues who have and/or are achieving success. Most are happy to share what they did to get it right and advise you of ways you may be able to avoid the pitfalls that are an inevitable issue for any and every business2. Be honest with yourself about your strengths; but equally be honest about your weaknesses and how you intend to overcome them
2. Set clear business objectives and targets for yourself and ally them to the lifestyle that you want. This is crucial. We don't all measure success in the same way. At the same time write down and agree with your teams (see 6 below) your criteria for measuring success
3. Don't think short term or be dictated to by immediate economic factors such as interest rates. 'Experts' are consistently inconsistent with their forecasting and frequently wrong!!
4. Recognise from the start that whilst you may have a plan in place, many factors over the course of time will occur that will need you to review and adjust. Be nimble and flexible enough to deal with the unexpected and turn those problems into opportunities
5. Define the sort of people you want to work with and for. This means your day-to-day work colleagues, your patients and your advisory team
6. Recognise the importance of everyone's physical and mental well-being and consider what steps you can take to maintain both. This is not simply a nod towards 'being seen to do the right thing' but a genuine part of building loyalty and teamwork 

B and I agreed that we will be working together to assist and advise dentists who are looking to start up their own practice. This advice will cover business planning and strategy, budgeting and sourcing funding. Do please contact me, with no commitment on your part, on 07785 757782 if this is of interest to you and /or you have any immediate or longer term funding requirements.

 Ray Cox, Managing Director of Medifinance explains the importance of presenting an evidence-based case when seeking funding

I'm sure you've heard the saying that banks lend money only to people who don't need it. Which at face value seems both contradictory and faintly ridiculous. But a cautionary tale highlights why perhaps there is more than a germ of truth lying there.

I was talking to a particularly successful practice owner recently who was looking to expand. His business was certainly profitable, and he had never experienced any significant difficulty in finding funding as and when needed. Essentially, he considered himself and his business to be 'a good risk' and that his relationship with his bank would stand him in good stead. 

This would, almost certainly, have been the case when that relationship was effectively between him and the Bank Manager, but things are different now. Firstly, he had to establish the right person within the bank to whom the funding application should be submitted and having done that send in his written plan for 'consideration'. He was not given any guidance by the Bank on what the plan should cover, but he felt he could put together a proposal that would produce a positive response.

Much to his amazement he was turned down flat. Why? Because, successful as his business was (and is!), he did not present an evidence-based case for funding. He made the assumption that a detailed, costed and realistic business plan was not necessary.

How to prepare a plan that will give you every chance of sourcing the funding you need

Of course, rules are there to be broken and a good few entrepreneurs break them and still the profits roll in. But for we mere mortals, it makes sense to understand from the start that to run a successful business and maintain that success depends on one key factor…..being and staying informed.

This means you will run your business in a business-like manner. It also means that when you need funding the lender appreciates that your case is based on reality rather than speculation.

1. Above all, monthly management accounts will demonstrate you keep your finger on the pulse. It will immediately convince the lender that you have the level of commitment required to run a business responsibly. Quite simply, it is not being run well unless it consistently monitors its costs, its profits, its losses and its cashflow.
2. It always pays to have a good team of advisers that understand their roles and can lend authenticity and credibility to your business plan. An accountant with experience of the profession is a given, but, depending on circumstances and resources, you may add legal, marketing and financial advising expertise to your team.
3. Indicate your ability to delegate and put in place the reporting procedures that allow you to assess and implement the information provided.
4. Be absolutely honest about the costs involved and the resources required to implement your plan. Do your research diligently and demonstrate you have done it. Do not attempt to ignore potential problems in the hope that 'something will turn up'. It rarely does!
5. As appropriate, support your application with evidence of your financial track record and management eg:

• Loan repayments
• Credit rating
• Credit control
• Management and control of overheads
• Cashflow
• Salaries, bonuses and pensions policy
• Assets 

Ray Cox, Managing Director of Medifinance explains why it pays to take a careful look at funding options when undertaking a major project

The point I really want to make is that when 'money is easy' we can fall into the trap of disregarding sensible financial management and the longer-term implications of our decisions.I'll give you an example …..

Recently a client of mine decided to set up his practice and fund both renovation and refurbishment and equipment with a single loan from his bank.He was being offered a good rate and, at face value, it seemed a good deal.However, what he had not taken into account is the shorter life cycle of equipment which would need relatively frequent updating and replacement.I pointed out that a single, consolidated loan would ultimately cost him far more than funding renovations and equipment separately. And we are talking thousands of pounds saved here.

Getting the balance right

No business can grow without taking a degree of risk but taking the time to plan carefully and review the options will be time well spent. So, my advice is always to strike a balance between ambition and caution. I have been fortunate enough to work with clients whose businesses have evolved and developed with considerable success but by the same token I have seen mistakes made that, with a little discretion, could have been avoided. I would never claim to have 'seen it all before', but Medifinance does have an unrivalled depth of experience of the healthcare markets and its funding. This is experience that we are happy to share with clients and potential clients without any commitment on their part. Another quick example demonstrates the value of marrying ambition with experience, taking a moment to step back, and as a result avoiding losses that could have run into hundreds of thousands ...

A long standing and very successful client wanted to expand and extend the existing practice. Concerned about the upheaval and impact on patients the decision was made to set up another practice with a 10-year lease to compensate for a short-term reduction in the existing facilities. I was concerned on three levels. Firstly, the effect on patients, many of whom might resent being selected to attend what was clearly going to be a less well-appointed practice, secondly, of course, the cost of setting up, and thirdly the long-term viability of running two practices.

We discussed these concerns openly and together assessed the pros and cons and the risks involved. In the end, working with the architect and builders, we went back to Plan A, amended the extension project with minimal impact on patients and without taking on the additional costs of setting up another practice. 

In conclusion

 Particularly if you are considering a major project for your practice, you would be wise to get an early overview of the likely financial, funding and tax implications before you start planning and briefing architects and builders. If you fail to do this a great deal of time can be wasted and unnecessary expense incurred as the project evolves. And as I have pointed out, sourcing the most advantageous funding goes a lot further than simply interest rates.

If you feel we may be able to help you with sourcing funding for your practice requirements do please give me a call. There is absolutely no commitment on your part. My mobile is 07785 757782 and my email is This email address is being protected from spambots. You need JavaScript enabled to view it. 

In this, the first of four articles, Ray Cox, Managing Director of Medifinance, looks at the key aspects of financial planning dentists should consider as their careers progress 

Based on working with and for the dental profession for many years I want to pass on some suggestions that I hope you will see as useful guidelines as your career progresses. This is the first of four articles (that will run on alternate months until next March) and will concentrate on the early years following graduation. Future articles will cover:

• Setting up squats and practice purchase
• Maintaining profitable and sustainable growth
• Planning for retirement

None of these articles is intended to be a definitive guide or promote any specific product or service. Rather they will reflect the stages in financial planning taken by the majority of the dentists with whom I have worked. Having said that, it is important to recognise that every case is different, and needs vary from dentist to dentist and practice to practice. 

Finance in the early years 

The right way to borrow money in your Associate years is to borrow as little as possible. Whatever your financial circumstances, this is the time to be thrifty and put in place the building blocks of your career. Save what you can……sensible sacrifices now will pay huge rewards in the time to come.

One decision that will, of course, dictate how you move forward is whether you see your future as an employer or as an employee. That is for you to decide. All I would suggest is to keep an open mind, but the issues I will cover in this series are fundamentally aimed at those who want to run their own practice. 

Developing and enhancing your skills 

In my opinion this will prove to be a sound investment for the longer term. The perceived value of good dentistry is far greater now than it was just a few years ago. There will always be those who consider a visit to the dentist should either be free or only in an emergency; but this is their problem, not yours! Good dentistry merits and commands good prices. 

Putting it bluntly, the better you are at doing dentistry, the better placed you are to be successful. So if you are going to spend (or even modestly borrow) during your Associate days, this is where you should do it.

Life balance 

This may seem to be something rather outside the remit of a series of articles based on using and making money. But the bottom line is (to repeat an old cliché), Money doesn't buy happiness, and it's no good making bags of it if you're constantly stressed out and worried.
I would recommend setting alongside your business plan the lifestyle you want and the things that you will enjoy and find fulfilling. Then look to see how you can use money to achieve these. Putting it another way, a wise maxim is to remind yourself that you are not simply going to make money, but that you are going to make it work for you. 

Moving to the next stage 

If you wish to discuss, confidentially and without obligation, any issues regarding financial planning, you can contact Ray on his mobile 07785 757782 email: This email address is being protected from spambots. You need JavaScript enabled to view it. www.medifinance.co.uk