It is said that raising kids takes a village. Likewise, it takes a team to properly run a business—not just within your office, but a team of trusted business advisors surrounding you.
As the business owner, you have many hats to wear. But trying to do all the work yourself is bad for your business, not to mention your health. Surround yourself with advisors who specialize in their fields—just as you specialize in dentistry—and who understand and are committed to helping you achieve your long-term business goals. That doesn’t mean you abdicate decision-making; rather, you rely on your advisors to help lay out strategies, anticipate opportunities and obstacles, and work with you to identify alternatives and options to help you achieve your goals.
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With tax time approaching, here’s a great example: Did you benefit last December by getting advice on advantageous year-end tax strategies such as these?
- Prepaying as many first-quarter expenses as possible (e.g., rent, leases, loan and mortgage payments, property taxes)
- Making investments on things such as space upgrades and expansion, team training, and business coaching
- Making charitable contributions on the personal side
Done correctly, spending money last December that you expected to spend in the first quarter of this year would have reduced your 2022 tax burden, while simultaneously driving growth and profitability in 2023 and beyond. If you missed out on the opportunity to do that, you’re missing an important member of an advisory team whom you can rely on to provide beneficial tax reduction strategies.
Caution: Don’t automatically equate a tax accountant to a business advisor. Most accountants advise clients to suppress their income to reduce taxes in the immediate term. Considering the value of your business is largely defined by your income, suppressing income for the purpose of reducing current taxes is rarely the best long-term business decision.
Assemble the right team as soon as possible
Assembling the right team of advisors takes time. You want people you can trust who have a track record of helping businesses grow and succeed. The advisors should also be the right fit for you culturally—people you personally connect with. Some trial and error are inevitable, so the sooner you start the process, the better.
If you have a relatively young practice, start early benefiting from business advice from those more knowledgeable than you. An added plus is that this forces you to define your long-term business goals so your advisors know what you’re trying to accomplish and can help you get there.
If you’ve been in business for a while and have never had such a team, you might be inclined to think you’re doing just fine without one. But you don’t know what you don’t know. You don’t know how much more informed your decisions could have been or how much better your business might be doing today had you benefited from sage advice at the time.
If you are beginning to entertain the idea of retiring or selling your business in the years ahead, you should start assembling an advisory team with real urgency. If you doubt you need trusted advisors, ask these tough questions:
- Do you really know how to go about selling a business?
- Do you know how to determine the best timing?
- What should you be doing in the meantime to maximize the value of your business?
- When was the last time you had your business professionally appraised so you know its real value, including long-term revenue generation?
- How confident are you that a buyer’s due diligence won’t uncover crossovers between business and personal finances?
- Do you know all the pros and cons of selling a practice versus keeping it as passive lifetime income? (This question is my favorite.)
Selling your practice will likely be the biggest financial decision you make in your lifetime. It will affect not only your bank account in the short term but also your family’s lifestyle throughout your retirement years. It will even affect your heirs. Don’t be driven by emotion or the lure of a big one-time payment. Rely on knowledgeable advisors to help you answer those questions and make informed decisions.
Work on the business, not at it
Many practice owners believe the only way to increase income and grow their business is to personally work harder by seeing more patients. But that guarantees a revenue ceiling, not to mention physical and mental exhaustion over time. The right advisory team will ensure you maintain a broader business perspective so you’re always working on the business, instead of working at it. Then, when it comes time to plan for retirement or selling your practice, the decision and process will be far less stressful, and you’ll be in a solid position to get the most for your life’s work.
Editor's note: This article appeared in the March 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.