Young dentists shouldn’t be afraid to invest—here’s why
I told my accountant about the six-figure technology investment I wanted to make, and she was skeptical. She said things like, “You just bought $200,000-plus in CBCT and CEREC,” and “You really need to wait.”
As dentists, we often ask our accountants for permission to buy something and take their advice in isolation, but this can be misleading. They have no idea what a Solea laser or other technology will do for your patients or revenues. To them, it is simply an asset and a liability that they have to account for on your balance sheet.
In this case, waiting to buy a Solea laser would have cost me a revenue increase of 60% in my first year. I can’t imagine what it would have cost me over three years while I was “paying off other equipment.” What about compounding that amount over the next few decades? Fifteen months after my purchase, my revenues and my practice have grown to support a full-time associate who started early 2018, and a part-time associate who started in early 2019. This has allowed me to go from working more than 20 days a month to 13 days a month of clinical practice.
Two years out of school, I bought a practice along with its real estate for $1 million and had more than $200,000 in student loans, which was very scary to say the least. Six months into my practice, I was making a bit of money, which was good, because I had assumed I’d be taking nothing home for quite a while. Three years after opening my practice, my revenues are up 300% due to a number of practice-building purchases, such as Solea, in addition to adding CEREC
Omnicam (Dentsply Sirona) and a milling unit, an Orthophos SL 3D CBCT system (Dentsply Sirona), Schick sensors (Dentsply Sirona), new endo and implant equipment, and a new RamVac vacuum (DentalEZ).
Before anyone thinks that my accountant is crazy or not good at her job, let me clarify—she is a wonderful accountant, but she is not a business coach. She is one of the many advisors I rely upon and trust to help me with my practice journey. We dentists sometimes act like accountants are the gatekeepers of our practices and money. But this is silly. It’s actually unfair to them to hinge the entirety of our decision on their sole opinion. It’s really putting them in a tough spot. They either hold you back from something that you know would work or they encourage you to get something that you don’t really need.
A technology purchase is simply an asset as well as a liability that they have to account for on your balance sheet. That balance sheet is based on your company’s financial situation as of today and is a summation of your company’s history: all the loans, cash, and assets you have accumulated along the way. Your accountant should be providing you (and the rest of your advisors) with accurate information so that you can make a decision.
Just because you have other debts on your books doesn’t mean you shouldn’t add more. Your accountant should be helping you to determine if you have the cash flow to support a new payment. Simply put, is there enough cash left over after your current expenses and debts to justify investing in a new technology? I also include my general dentist salary (30% of what I personally produce) as an expense. This means that all of my investments come out of the profits of the business.
At the end of the day, your accountant is primarily responsible for assessing your tax situation and keeping you in good standing with Uncle Sam. Your accountant is probably your single most important advisor when starting out, but I would make it a point to equip yourself with a good attorney, banker, financial advisor, and business coach. Bounce all of your ideas off of them and listen to their unique input. If all five of your advisors are in full agreement, be worried that you may have a lot of “yes” people on your team. Pushback is a good thing and I appreciate my accountant’s advice either way.
And remember that student debt that I mentioned—the debilitating, scary student loan? That was paid off in five years, which would not have been possible without growing the revenues of my practice with technology.
Author’s note: I’d like to mention that I am a dentist recounting my own personal experience. I am not an accountant, and I recommend that readers seek appropriate professionals to help make financial decisions (e.g., a CPA, business coach, financial advisor, colleagues, etc.).