If you own a private practice or hope to own one day, I’m guessing you’ve heard about the equity that you can build.
After all, it’s another asset. And it can be worth a TON of money with all the sweat, blood, and tears that you put into it. But how can you gain the most out of this asset?
If you have been grappling with these kinds of questions or if you are simply curious about them, you are going to love our next guest.
Our next guest’s expertise lies in the area of valuation. I first heard him on the Dental Preneuer podcast, a podcast that specializes in dental private practices. He was talking about some of the common mistakes that dentists make and I was nodding my head and saying YES outloud. It was such good stuff, I wanted to make sure to invite him onto this podcast.
I know we’re going to learn a ton today.
Please help me welcome Jake Conway
In this podcast, you will…
- Discover the Top 3 Financial Mistakes Dentists Make In Their Practices (and maybe you are too!)
- Learn where you might want to negotitate & snag low hanging fruit
- Discover the numbers & formulas that lead to success (Hint: It involves a 30/30/30/10 rule)
- Learn the hack around costly supplies that they use to negotiate
- How the trade-off between being an employee and employer can be a huge opportunity cost worth considering
- and much more!
Resources Mentioned In This Podcast:
The Dentalpreneur Podcast on Itunes
Connect with Jake Conway on LinkedIn
TRANSCRIPT
Dave: My name is Dave Denniston. Welcome back to the latest episode of Freedom Formula for Physicians Podcast. Well, my friends, if you own a private practice or you hope to own one one day, I’m guessing that you’ve heard all about the equity that you can build. After all, it’s another asset. Right? And we all know it is worth a ton of money with the sweat and blood and tears that you put into it, but the question is how can you gain the most out of this asset? Now, if you’ve been grappling with these kinds of questions or maybe you’re just curious about them, maybe you’re not in private practice but you’d like to be, you are going to love our next guest. He has an expertise in evaluation. As a matter of fact, I first heard him on the Dentalpreneur podcast, and he was talking about some of the common mistakes that dentists make with evaluations. And I was just actually working out and I was not in my head. I was, like, “Yeah. Exactly.” And it was such good stuff. I just wanted to make sure to invite him here today. So I know we’re going to learn a lot. Please help me welcome Jake Conway. Welcome, Jake.
Jake: Hey, David. Thanks for having me on, man. I really appreciate it.
Dave: Hey, glad to have you here. Well, let’s keep going, man. Tell me a bit about your journey. Tell us about where’d you start, how’d you get going in this area and in working with dentists.
Jake: Sure. Yeah. So I actually went to the School of Hard Knocks. I started my career in the financial, I guess, realm back in 2007 it was with Shell Vacations Hospitality. I was in charge of operations and finance for the southwest region. So that’s kind of where I got my feet with analyzation, looking at numbers profitability, that sort of thing in the business world. I realized after a short time that corporate life was not for me, like many of us out there. And I started my own journey in what I knew, which was numbers and finance business, that sort of thing. Well, we’re talking earlier, David, and I met Dr. Mark Constance, which some of our listeners may be familiar with that name out there, through a mutual friend of ours. And we actually sketched out this consulting firm that he has built, the Dental Success Institute, on a bar napkin over some cocktails. So it’s that cliché that the thought was on a bar napkin over a few drinks.
Dave: Awesome.
Jake: So that’s kind of how… Now, he was, during that conversation that we had, he was explaining his frustrations with not being able to see the numbers profitability, expenses overhead, that sort of thing at a glance with his then clientele. And me, coming from my background and knowing what I knew, of course, I offered a solution. And within 10 minutes, we had somewhat of a product built. And I guess that was four years ago, five years ago, going on five years now. So it just kind of grew and evolved since then. And now, with over 75 clientele around the world that we’re working with, and we see hundreds and hundreds of dental practices from analyzation standpoint to evaluation and so forth. So that’s kind of, in a nutshell, how this whole thing was conjured and how my I guess my transition into the dental world kind of I guess happened.
Dave: Well, it’s interesting, because I know… One thing that I really just find fascinating about Marcus is how he acquires multiple practices, which I think a lot of physicians could learn from this model. He has this whole idea of implementing systems and making everything work on a system. And it sounds like you guys have developed this whole evaluation. Has systems kind of been something that’s important to you kind of in this journey? And what’s that been like?
Jake: Absolutely. So systems are the background of any business, really, and especially in the dental practice. We call them moving parts that go into growing the business. With local practice ownership, we’ve kind of realized that central management is kind of a key. So those who are listening out there, if you have two, three, four, five plus practices, you either have it in place already, the central management, which is your billing, your centralized call center, that sort of thing, or you don’t and you probably should start to try to get that in place. Not only is it, from an operational standpoint, essential, but when you go to sell these—if that’s in your future to sell these either to private [Indiscernible 0:05:33] or other potential dentist—owning dentist groups or so forth, that is very attractive on paper when you have everything centralized and everything is all the same. So that’s a big portion of what we try to accomplish, and what we help others do is set up those systems and operations so that they’re transferable to every practice that you acquire that’s [Indiscernible 0:05:59]. So that’s… Yeah, that’s a very good point, David. That’s exactly what we shoot for.
Dave: Well, I think it’s so cool just seeing how that works. I even think, related to my practice here, I think… I believe you guys kind of came up with, like, a system of lights. Right? Green, yellow, red, in terms of measuring. Hey, there is this area versus this area versus this area in those systems.
Jake: Right. So we… Not only the system, but we look at overhead and the profitability, and that’s something on a month to month basis for all of our clients. And it’s exactly what you said. It’s—red is bad, black is good. So at a glance, you can see exactly how your dental practice is performing from another standpoint. And then the systems and operations kind of go hand in hand. If you’re struggling in that area, numbers never lie, the whole thing. So if your overhead and your numbers are a little at a lack, that’s where we start. We look at your systems and operations to see how tight those truly are. And then we focus on growth. So once we get those systems tightened up, we could overhead—where can we cut corners and cut costs a little. That’s kind of the first step in what we do when we’re looking at a new practice. And then obviously, after that, once we have those fine-tuned, then you look at growth and areas to increase production and obviously move the needle in that bottom line.
Dave: Well, what’s interesting to me is that as I think about dentists and I think about doctors, if dentists have been on this path where marketing has been extremely important, it’s kind of the life blood of the business whereas physicians, at least in the past, they get so many referrals. They have so much business. They can’t handle it, quite frankly. And they’re overwhelmed with EMRs and all the paperwork and stuff that comes along with that. Between you and Mark talking, are you guys going to…as you’re hearing from people that are not in the dental field, are you guys hearing that, seeing that? Is any of that shifting at all? What’s kind of your take on that?
Jake: Well, I mean, with other physicians and the medical field, that’s all driven by insurance. And that’s… It’s usually effective to the private practice and the medical field. Dentists are a little different. Yeah, there is insurance, but there’s still fee for service out there. It’s not huge… I mean, there is a huge sect that is insurance driven, but there’s still some organic marketing to do whereas in the medical field, you get a bunch of referrals from the insurance, and there you go. Basically, the insurance floods your front door. But in dentistry, there’s an area of opportunity in the fee for service and referral based for marketing and advertising, and that’s kind of… Like I was saying, once you have established your overhead at a healthy percentage, your systems are in place and so forth, then we look at ways to market within your area. But to answer your question [Indiscernible 0:09:07], David, I think that because of the insurance influence in the two different realms here, I think that’s kind of the driving force behind if marketing and advertising is needed versus not needed. So that’s kind of, that’s my take on it anyway.
Dave: Well, my take on it is, kind of going back, is I think doctors, in many ways, actually could model dentists better, because there are so many physicians today that are just burned out. And they’re just like, “I can’t keep up the pace that they’re working,” because many of them, putting 60 hours plus and just seeing patients, not even adding on some of the charting. So for me, I think what’s valuable about this conversation is what can we take from this that can be modeled. So taking from dentists and successful practitioners like Dr. Constance that could be modeled for doc—because I think going back more towards membership fees or fee for service rather than insurance and having to use marketing systems and some of these things could be, in the future, for someone that wants to have a highly profitable practice. So that being said, I would just love to hear from you about some of these cash flow chokes. So you have this system, this grid that helps to identify, “Hey, this is going awesome. This sucks in terms of cash flow.” What are some of the common chokes that you see often in these private dental practices?
Jake: Ah. Good question. I mean, the biggest expense in most businesses is going to be payroll, but we don’t really focus there. We focus on the low-hanging fruit to start, which is going to be your dental supplies. So that could be transferable to the private practitioner and medical field. Your supplies, lab fees, that’s another big one. And it comes down to your vendors and negotiating with them to drive [Indiscernible 0:11:02] because the profit margin is so high on all these supplies. The big guys at Patterson, the Shine, the likes of those businesses out there, those big suppliers. And that’s kind of where we start. It’s that low-hanging fruit. Even office supplies, if we see that you’re running high or too high in office supplies, I mean, change the way you think about that and start establishing a budget and, again, just focus on those low-hanging fruit items first. And again, we see it time and time again, supplies, lab fees, office supplies, even facility equipment, we can take a look at. Once we start to shave those down and start negotiating your overhead down to under 60 percent, which overhead, for those of you who are not aware of overhead, how we term the phrase is our expenses, excluding doctors’ salaries and associates out there. So all your payroll, all of your operating expenses, so forth, that should be running 60 percent or lower, 60 percent being the absolute ceiling. So once we can get your practice to that mark or under that mark, then we start looking at ways to drive production. And one of those tactics that we try to use is using some of those savings that we had in the dental supply category, lab fees, then we try to start to show that with the staff to motivate them to produce for you. So we have a couple of different staff incentive programs out there that’s kind of a form of profit sharing. So once we get your overhead down, then we can start sharing those savings with the staff to increase production, along with marketing strategies and so forth that are designed for your area using demographics and so forth. Because marketing that we would do here Prescott is going to be much different from you in Minnesota, David. So I mean, that’s kind of the approach that we take when we’re looking at ways to increase profitability using the existing staff and watching cash flow on a month to month basis.
Dave: [Indiscernible 0:13:08] to recapture that, Jake, real quick. It sounds like negotiation. Right? That a lot of times, you go to a store. Right? You go to buy a gallon of milk or whatever. And you go to the checkout counter. We can’t negotiate that. Right?
Jake: Right.
Dave: [Crosstalk 0:13:22] talk to the clerk.
Jake: That’d be [Indiscernible 0:13:24]. I don’t know.
Dave: Maybe. Right? And in comparison, when it comes to this other stuff, a lot of these business expenses, I think what a lot of people don’t realize, which is such a good point, is you can negotiate this stuff up to a certain point, obviously.
Jake: Absolutely.
Dave: Are there any, just kind of, hacks or shortcuts that you guys have used? Like, do you ever look for, rather than go in direct through Shine or Patterson or any of those companies, do you ever look outside the box, like on eBay or Amazon or something like that? Or are—just the quality and safety from being shipped from China or wherever else just is never good enough? Give me some feedback on that.
Jake: Yeah. Yeah. Good question. So we actually have a couple of not so big name vendors out there that we like to deal with. Darby, I’m sure—well, some of you have heard of Darby. Unified Smiles. And there’s a couple of online, like Net32 and AM-Touch, which are a couple of online suppliers. And we found that you don’t have to give up the quality just for a negotiated fee, a negotiated rate. So what we do is we take…we have the front desk staff pull your pricing sheet from your current vendors. Then you take that to, like I said, at Darby or Unified Smile, one of these smaller guys, I guess. Right? Print—or in quotations. And you then give them that list and see what they can do for you. And they’ll cut and slash and basically drive every item line down to, like, the gloves. If you’re paying $10 or whatever, they’ll drop that to $7 or whatever the case may be. So after you have that, then you take that back to your Patterson or your Shine. If you’re really happy with your vendor and your rep, you say, “Look. I’m being approached by another outfit out there that can cut supplies by X amount of percentage. Well, can you do it for me?” And 9 times out of 10, they will match or beat that price. What we do, we do about two or three rounds of that to get it down to as much as you possibly can. Once you have the quote from Patterson, go back to Darby or Unified or whoever you’re using and say, “Look. They can either match or beat it.” Do the same thing a couple of times, and before you know it, your dental supplies are at under 5 percent for the month, which that’s the target for dental supplies you like to see. Five percent of revenue should be…five percent or less really should be going to dental supplies. That’s kind of how we drive that cost down. Same thing goes for lab fees. Even if you’re under 9 percent, which is what we like to see that at, even if you’re under 9 percent, [Indiscernible 0:16:05] if you can save a few percentage points on a million dollar practice, it’s $20,000, $50,000 in your pocket over the course of 12 months. So, like I said, just because you’re under in an area doesn’t mean you can’t negotiate still.
Dave: Alright. Let’s go to our commercial break. Well, my friends, as you’re listening to this podcast today, we’re talking this month about this concept of retiring early. And I know you might be sitting there saying, “Yeah, right. I know this can’t be me.” But whether you’re a resident, whether you’re a fellow, whether you’re a practicing physician many years in, I want to encourage you there is a specific path. There’s a specific order to the way that you should be getting these things done. And I have laid out, in dedication to my good friend, Dr. Amanda Liu, a roadmap, The Physicians’ Roadmap to Retiring Early. And so what you can do is you can text “retirementroadmap”, all one word, “retirementroadmap”, to 44222. This is a brand-new eBook to help you get started. People often question, “What should I do first? What is the order I should do things?” Well, I’ve laid out, in dedication to Amanda, each step-by-step thing that you should be doing in this specific order. And whether you’re a resident, whether you’re a fellow, whether you’re a practicing physician, 25, 35, 45, 55, 65, you want to follow these principles. And so my friends, make sure, again, text “retirementroadmap” to 44222. All the best to you. Look forward to hearing from you soon. And now, back to the show.
Dave: Well, here’s something. I was wondering about, related to overhead, as I’ve listened to some of your great podcasts you guys have, is how does… Let’s say you have a young physician or a young dentist, and they want to get into a practice, they might have a ton of medical school or dental school debt. And of course, they don’t have a lot of cash, in many cases, to put down. Right? So they have to go and borrow money from several different kinds of companies or friends and family or whatever in order to finance the purchase. How does debt and interest, because I normally think of earnings, right? Earnings can be before interest tax and appreciation and those kinds of things, EBITDA. How does that interest and debt cash flow piece play into this 30, 30, 30, and 10 model?
Jake: Right. So we go off of gross. We don’t look at any after taxes. We look at everything before. So that’s your EBITDA number. So when we look at overhead, we look at, like I mentioned before, 60 percent is the absolute ceiling, which is, again, all your payroll fees, hygiene salaries, staff salaries, payroll taxes, fringe benefits, so forth, that should be running at 30 percent. So that’s the first piece of that 60 percent. So 30 percent or lower should be allocated to payroll, all the fees associated with that. The next 30 would be operating expenses, which is your fixed and variable costs, facility and equipment, like we talked about earlier, dental supplies, lab fees, advertising, marketing, other expenses, telephone. Basically, all other operating costs within your facility should be running at 30 percent or lower. And then we like to see a 10 percent profit margin. So after you’ve paid, so you have your 30 percent going to payroll, 30 percent going to your operating, then there’s 30 percent left over for doctors’ salaries, including the associate pay. And then we have 10 percent leftover profit back to the business. Now, that’s a gray area because, again, you can leave that 10 percent back in the business or take it as the owner in the form of earnings, and then obviously, taxes will be incurred after that. So that’s kind of our model. That’s kind of how we look at practices, the 30, 30, 30, 10 rule. And that’s how we build our reporting and report back accordingly on a month to month basis with our clients. Does that answer your question, David?
Dave: No. No. Actually, [Indiscernible 0:20:34] too. My question was so normally, that’s EBITDA, right, so that’s before interest, which is where you’ve borrowed—
Jake: Yes.
Dave: —to buy a practice. How does that money that you borrowed from the practice fit in to this…
Jake: Oh. Got you.
Dave: …this model. Because you might have $3,000 or $4,000 or $5,000, or $6,000 a month payments…
Jake: Yes.
Dave: ….that you got to pay for having acquired the practice.
Jake: Right. So that would be considered an owner’s loan. So that would actually be allocated to doctor’s salary. So that would be in a form of a distribution and so forth. Because if the practice were to sell tomorrow, the earnings would then go to the owning doctors. So that’s kind of how we handle that.
Dave: So essentially, we want to look at it…someone wants to follow this model, which I think is a great one, that you have to take—
Jake: Right.
Dave: —a reduced salary in order to finance an acquisition if you’re going to buy a practice.
Jake: Depending on the profitability of the practice. If your overhead’s running at 45 percent, then you have—it has room for that loan payment, as well as taking a healthy salary, 30 percent of your production as the only doctor and then whatever’s left over in the business as a form of salary and, slash, distribution. So to answer that in short, yeah. I mean, it all depends on the health of the business. But if you’re running tight, then yes, we would…that would be considered, like I said, a distribution. So if that’s the case, then you may need to take a little bit less of a salary, but you’re gaining equity in your business by paying off that loan, so it’s kind of a win-win.
Dave: Yes. Yes. Totally. Totally. Totally. Now, I’d love to know, as we look at… And this is true of dentists, as well as doctors. I see more and more dentists that are salaried employees. I’d love to know from your vantage point what do you see is this tradeoff between working for someone versus working for yourself financially as we start to move now into evaluations in our conversation.
Jake: Right. Well, we just—we talked about it briefly just a second ago, which is equity. Equity is king, especially when you’re looking at the long-term play and as far as investments and that sort of thing. I mean, we all have our 401Ks and Roths IRA, that sort of thing, IRAs, traditional, but equity in the business is really king. And when you go to sell that off, there’s many, many tax advantage of that. Do you know, David, there are just so many leverage points in owning true equity, whether that’s real estate or a clinician or a clinical practice, that sort of thing. So moving forward, a salaried employee, there’s not much… I mean, you’re guaranteed a salary, that sort of thing and have your clientele base there. You’re not responsible for the advertising, the headache of running the business, all that. However, you have no equity in the business, and there’s no real end game unless you just want to be an associate for your whole career, which is that’s okay if that’s what you want to do. But again, there’s just—the long-term play isn’t there. Just traditional investing just doesn’t cut it really in anyone in my opinion. It’s a good supplemental way of investment, but I think that if you have a chance to own equity in a business, I think that’s the way to go. But comes along with that is, like I said, with the headache of running the business, you’re responsible for your employees, their way of life, paying the bills. So with the reward of having that equity, there does come some responsibility and headache, but in the end, it’s all worth it.
Dave: Well, I think it’s an important point. I mean, if the practice is ran in a healthy way, hopefully, you’re doing the same thing that employees are doing as well. Right? You’re maxing out your 401K.
Jake: Yes.
Dave: Maybe doing some matching and profit sharing out of the company. And then on top of that, you’re building the equity. It’s the rent versus own argument, which…
Jake: Absolutely.
Dave: I still tend to look at, “Hey, you have an asset. That could be—sold it if it’s healthy. If it’s not healthy, you might have a problem.” Right?
Jake: Right. Well, then you need to do some work and get it profitable again.
Dave: Absolutely. Well, I would love to know… Now, let’s focus on evaluations for a little bit. So tell us a little bit, Jake, what are some of the common mistakes that you see in evaluation that dentists or doctors are making today?
Jake: Yeah. Actually, we see it time and time again. Just not getting enough information. These are brokers out there. And I’m not going to talk [Indiscernible 0:25:13] about them, but they have hundreds of these, and they throw together an evaluation packet and a pro forma. And they say, “Okay. Here’s an evaluation of the business. Take it or leave it.” And negotiations start. We just find that’s just not enough out there anymore. If you’re either looking to acquire a new practice or you’re fresh out of dental school and you want to start your ownership journey in the dental field, we like to, like I said, dig a little deeper. And that’s just a matter of asking questions and just knowing what you’re looking for. If you want, David, I have a list here of how we—what we look at.
Dave: Sure.
Jake: And what we try to pull from either the accountants or the broker directly or from the owning dentist himself or herself. So if you like, I could run through this real quick.
Dave: Yeah, man. Do it. Go for it.
Jake: Cool. Alright. So we have three areas that we look at, which are the logistics of the practice, the clinical stats, and then obviously, the accounting information. So on the logistic side, look at the number of ops, the staff experience, the number of staff members and the compensation, [Indiscernible 0:26:30], their compensation, number of associates and their compensation plan, look at what their marketing structure’s like. Do they have a website. Are they doing internal, external marketing? And a current equipment list. So that’s kind of how we look at from the logistics part. From the clinical stats, look at active patient base. We know how many current active patients they have in the past 24 months. Active hygiene patients. Now, this is kind of outside the box way of thinking, I guess. Not many evaluations look at the stat, but we look at active hygiene patients versus active patient base, and we compare those two. So what you do is you divide your hygiene patient, total active patient base, divided by the total active patient base, you will get some sort of percentage. That should be at least 85 percent or higher. If it isn’t, there’s a huge opportunity for the practice, but it’s a negotiation tactic for you when you’re establishing the true evaluation of the practice itself. And we see 9 times out of 10, that’s below 70, 65 percent. So typically, that’s a pretty big leverage point. But also, if you were to acquire the practice, it’s a huge opportunity to flood the practice with new patients, reactivation programs, that sort of thing, not to get some hygiene checks in the door. We look at new patients for the current year, production and collection for the prior and current year. We also look at the prior three years collection, because that’s how the evaluation is actually established. I’m pretty sure you all have heard it’s the average of the past three years collection. And then between 75 and 90 percent of that is going to be the evaluation. That’s kind of how they do it. It’s kind of a simplified version, but this is why we do our homework, because if they’re evaluating the practice at 85 percent of that number when it really should be 70, these are areas that you can look at to plead your case and have some leverage in negotiating the price of the practice for acquisition. We look at…
Dave: Let me just interrupt you just for a second.
Jake: Go ahead.
Dave: So it’s really all kinds of names and numbers and stuff for people to look at.
Jake: Sure.
Dave: I’d love to hear just kind of a story real quick. When’s the time that one of these things just didn’t go well for someone? That they were looking at some of these stats, and the stat wasn’t the way it actually appeared to be when they went to make the acquisition. Can you tell us about a time like that?
Jake: Yeah. So actually, it’s a pretty big one. We work with a client down in Phoenix here that was looking to sell as opposed to buy, and we were helping him look at the true evaluation of the practice. And when we were looking at the P&L and the collection in the software, they weren’t matching up. Now, in a PPL or insurance driven practice, it’s not going to be exact, but over the course of six months, we were looking at about a $70,000 difference between what was on the P&L that I should hit the books and what was actually in the collection in the software. The software was heavy, so we really could not figure out what was going on, why there was such a big disparity in what the software showed and what the P&L showed. Well, after digging around a little bit, this isn’t typical, but we actually found that one of the staff members was embezzling money. So yeah. It was a huge, huge… I mean, we’re talking years of this. It’s a huge, huge issue. I mean, the employee was, like, family to them. It was a big, big debacle. It was just a huge hit for them. Very, very, very disconcerting. But just going by the software collection, they could have sold that for more than what was actually hitting the books on paper. So that’s kind of, from a buyer’s standpoint, you need to be leery of those nuances, and that’s why you got to dig a little deeper and look at the true health of the business from another standpoint. So kind of a short story there.
Dave: And what about the other positive side there? Maybe something that came out great. You were talking about some of these ways to look at the health, to do a reactivation campaign or something like that. Can you think of another story the opposite way where evaluation was a positive surprise in terms of, it went better than expected.
Jake: Well, there was another gentleman out in the Midwest that was looking at a conglomerate of actually three practices. And they were going to sell them all at once. Looking on paper, they seemed okay. They were farming out a lot of their endo and their oral surgery and so, so there’s an opportunity there to keep everything in-house. But what we didn’t realize is that they did hygiene procedures, but it was all dentists. There was no hygiene department. So it was kind of after the fact that we realized that there was no hygiene department itself. We saw hygiene codes on the books, but, again, the dentists were doing themselves. So after the acquisition, we found, again, there was no hygiene, so we immediately put hygiene departments in all three, and we actually saw about a 25 percent increase within the first six months of ownership. So it’s kind of… It kind of goes against what I’m saying as far as doing your homework, but we looked at the numbers and we saw hygiene codes. Again, we just assumed, kind of a mistake on our part, but come to find out there was no hygiene department. We implemented a hygiene department, and boom, there was immediately instant increase in production just from having a hygiene department. So I guess the moral of the story there is make sure you do your homework and make sure you dig a little deeper than you normally would. So yes, that’s kind of the opposite spin on practice acquisition from my experience anyway.
Dave: Wow. Well, I think there’s some really good stuff there. And well, I’ll make sure to honor your time and start to wrap this up. I’d love to know, Jake, what do you think would be some great places…? Because I hear all the time that, “I haven’t gotten a business education in medical school or in dental school?” What do you think would be some great places to get that education, whether it’s books or podcasts or events or anything like that?
Jake: Well, you can listen to Dentalpreneur, Mark Constance, [Indiscernible 0:33:14] for the dental practice owner out there. I listen to a lot of—like, Smart Money Podcast is another good one. Let’s see. I think, from my experience, the best thing to do is just delve into the numbers yourself. If you own a business, start diving in your own numbers and learn the ins and outs within your business and learn some areas of opportunity that are in your practice you may not know even exist, whether that’s in hygiene, marketing, like, we’re talking about [Indiscernible 0:33:49] dental supplies. I think the best way to learn is just by doing it. So if you have a business or have a practice out there, I’d say listen to some of those podcasts mentioned, but just getting to your own numbers I think is the best teacher. And sometimes, learning what not to do is the best thing. So that’d be my advice.
Dave: I think that’s great. What about…? Just kind of closing thoughts. As we talk to the doctors and dentists that are listening out there, what closing thoughts do you think that folks should be aware of in regards to running their practice and regards to evaluation and stuff like that?
Jake: I’d say profit is great, but you need to start reverse engineering from your overhead. So I would first establish a breakeven point. Like I said, get into your numbers, see what your breakeven point is. And then from there, you can establish what above and beyond that number is and what kind of proper percentage you’re actually looking at. So to get that number, you have to, again, dive into your numbers and understand where you’re breakeven point is with the new practice. Because anything beyond that is going to be either money in your pocket or a higher evaluation for the practice when you actually go to sell it or you bring on a partner. If you’re going to sell off, do the [Indiscernible 0:35:11] method where you sell of a certain portion to a partner or associate that came on. It’s a higher evaluation, and you’re going to make a bigger chunk of change when you go to either sell or bring on a partnership or however you’re going to structure that. So that’s kind of how I would approach setting yourself up for a nice evaluation.
Dave: Great advice. Great advice. Well, thank you so much for being with us, Jake. And if people have more questions, how can they follow you? How can they get in contact with you?
Jake: Sure, man. So if you have any questions on this, I can just—shoot me an email at jake@truedentalsuccess.com. That’s Jake, J-A-K-E, at truedentalsuccess.com. And you can follow the Dentalpreneur Podcast. I’m a frequent guest on there, and Mark Constance, that’s kind of his thing. I’m on there, so that’s kind of how you can get in touch with me. I’d be happy to answer any questions or just if you feel like reaching out, go ahead. Just drop me a line, and we’ll get on the phone or whatever the case may be. So yeah.
Dave: Alright, man. Well, sweet deal. Well, thank you again so much for being with us. And my friends out there, if you’re a physician or you’re someone else servicing a doctor, you want to tell your story, you’re grappling with stuff like this, I would love to share it in the next Freedom Formula for Physicians Podcast, so make sure to contact me at dave@doctorfreedompodcast.com or on my website, www.doctorfreedompodcast.com. For the Freedom Formula for Physicians Podcast, this is Dave Denniston. Thank you so much for joining us. Please make sure, subscribe on iTunes. Check in again soon. And remember, my friends, make sure to cut your debt, cut your taxes so you too can live a liberated lifestyle. See you next time.
