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.
This is so important. There is no set formula but I would recommend writing down the way you see your career progressing and what things you feel you need to take into account (including funding) in order to reach your goals. Review your plan regularly keeping in mind that this is a steep learning curve for you and if it is your ultimate intention to run your own business, it is particularly important to observe what things work….and what things don't.
Start to build a support team
If it is your ambition to run your own business you are almost certainly going to need good, experienced and trustworthy advisers. In future articles I will spell this out in more detail but do not be tempted to cut corners and feel you do not need knowledgeable advice. So, use these first few years to make contacts and talk to colleagues with a view to having in place a professional support team when the time is right to take the next step.
You are going to need marketing, accountancy, financial and legal support and you would be well advised to think about companies that provide such services as surgery design, data base management, social media and training.
And a tip. Get recommendations from colleagues whenever you can. Some people are prone to rather exaggerate their achievements and capabilities!!
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.
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
My next article will address the major considerations that need to be taken into account when you set up a squat or purchase a practice.