Secure Dental_Gretchen Roberts: Audio automatically transcribed by Sonix

Secure Dental_Gretchen Roberts: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Dr. Nazish Jafri:
Hello and welcome back to my Secure Dental podcast. Here, we bring together some of the brightest minds in dentistry and business to share practical tips that you can put to use right away. Easy stuff that you can apply today. I am Nazish Jafri, CEO and Chief Clinician at Secure Dental. I'm still a clinician working with my hands. I'm also a co-founder of DentVia, which is an awesome resource for handling administrative tasks in your dental office. And today's question: Is your dental practice ready for massive shifts for 2026? Right now, I do see that AI is changing, like how patients find us. And also the second topic is like new tax laws that are being rewritten. And we want to know how we can keep our profits and make this year much, much better with some strategies that we can put in place soon, and they're easy for us to do. So, today we're sitting with Gretchen Roberts. She is the CEO of Red Bike Advisors. She's actually the CEO of CPA's, a firm that hires CPAs. So, we have a full powerhouse of resources right here. She specializes in proactive rather than reactive track strategies. For dentists, this is a difference between finding out what you own "..." and spend the previous 12 months making the right moves to ensure the numbers are low as legally possible. Also, take care of some things now so we can think of generational wealth, because as dentists, we're always behind that handpiece and we're always in the mouth. We don't think of these things till, you know, it's very, very late. And now the time has gone by, and your years have gone by. The second part, she specializes in marketing as well. So, we were going to pick her brains a little bit on why some of our 2025 marketing will not work in this, AI-driven today's search engines that we have. So, Gretchen, thank you so much. Thank you for joining us.

Gretchen Roberts:
Yeah, I'm so happy to be here.

Dr. Nazish Jafri:
Yeah, I am excited. Some of the topics that I have, some of the questions that I have, I think it's personal, I have experienced them, and we are still. So, hopefully, it's going to give a lot of value to our listeners. And we can pick your brains with the specialist being here about this. So, let me ask you a few things about marketing going on, because marketing is something that dentists don't look at. They think it's really expensive, and actually it is. And the service fees are there. The fees are so astronomical that dentists sometimes get scared, and they don't put in enough money in it, and it kind of goes on the back burner. And now you have patient problem. From the time we started 10, 12 years ago, the patient journey has changed quite a bit. And people are not picking the closest dentist near me anymore. So, if a dentist who is new, just starting off their practice, and has a limited budget, what would your advice be? Should they put their stuff into SEO, social media, Google ads to get that first few months of patient base?

Gretchen Roberts:
Oh, that is such a good question. And you know, I hate to sound like an attorney because I'm not. But it does depend, right? It depends. It depends on what kind of practice you have and what kind of specialty you have. First of all, if you're a general practitioner, probably gussying up your Google Maps page and making sure that profile is completely up to date, you're posting. Your pictures look great. That's a good, really first start, right? If you're a cosmetic dentist or you have some other kind of specialty in orthodontics. You're right. People will drive for that. I mean, I took my kid up like 35 miles up the road to get to the orthodontist. We wanted to get to, even though there were probably 12 nearby us. You know, how do we find her? It was actually a referral. So, there's a bunch of different things you can do. But I would think of it in terms of a framework right? So, there are basically two sides of marketing. There's brand, and there's demand. So, brand is like I have a really pretty logo. I've got a great website. You know, when people come in the door, we stand for something. Everything's color coordinated, all of that. That's your brand. On the demand side, that's where you're like, we are just trying to get our ideal client profile in the door so we can turn them into patients. So, a lot of people who don't have experience with marketing, professionals are a great example. Accountants are the same way, by the way. They don't really understand marketing. They have a profession, dentists have a profession. And so, they think, well, I'm going to get a marketing agency to do this work for me, but they don't really know what they need. So, the question you have to ask yourself first is, do I have a brand problem or a demand problem? I think the way it should start is closer to what we think of as the marketing and sales funnel. And yes, there is a sales funnel, even in dentistry, even in professional services. You want to start at the bottom. And the bottom question is, how do we get people in the door to become patients? And way up at the top is the brand. And so, you know, when you're trying to build a new practice, your number one priority is getting new patients in the door. It's not a beautiful website, and matching signage and all that stuff. That's all great, especially if you do offer a higher-level service like cosmetic dentistry. You want to look the part, basically, but getting people in the door is the first thing. What you want is you want to focus on demand. And then as you build demand, you can start focusing on brand, which is, you know, let's say, social media posts and fun team events and things like that. So, I would say to start with, the most important thing is how do we get people through the door? And you can do that in a number of different ways. And you know, like I said, the Google page is a great one. You can experiment with things like Google AdWords. You know, you can work your referral network. There are a lot of different ways to do that. I think referral networks are actually really good because, you know, if you have a specialty, for example, connect with every general dentist in your area and get to know them, bring them some cookies or something, and let them know you're open to referrals, because that's like a one-to-many connection, right? So, if you go out and you meet one dentist who can refer specialty patients to you, then you have a stream of people instead of you just met one person, or you have one person come through your Google AdWords. And if you don't have all of that back-end set up on the digital advertising side to receive them and nurture them and get them into your lead flow and then close them as clients, then, that, you know, there's a lot of setup in that, and it is really overwhelming. So, to wrap up, I'd say you need to think first about getting patients in the door. And the best way to do that is the one to many, which is cultivating relationships with other professionals who can then refer them to you. And it's free.

Dr. Nazish Jafri:
Yeah, you are so right. That is free. And I think that is something that we kind of forget when we are building a practice. Because as a dentist, it's your dream practice and you want to be really beautiful, and you want it at the perfect space, the corner lot, maybe beside Starbucks or Whole Foods. So, we do all that kind of stuff, and then we go in the first day, and there's nothing, and the second day, there's nothing. Or maybe one person trickles down, and it's limited because they don't know about you. How early should a dentist start marketing before they open the doors? In your opinion?

Gretchen Roberts:
Yeah. That's a good question, because you have to think about this in terms of how long it takes people to make that decision and then come in the door, right? And people are forgetful. And frankly, making a dentist appointment isn't at the top of their to-do list, usually, right? And so, you have to think about their timing and work backwards from there. So, you know, if you think about it from that perspective. This is a part of marketing you can do ahead of time, where you generate buzz. And you know, we're about to have a grand opening and all that stuff, and you want to get some excitement going and get people in the door that way. That's one aspect of it. But in terms of should I turn on Google AdWords and start spending money two months before the practice opens? Probably not. Right, unless you're just trying to book cleanings or something that people book ahead of time. If you're trying to get a client flow in the door, you need to think about, do I have the resources there to support that? Do I even have somebody hired to make the appointments, etc.? So, you need somebody on the back end that's supporting the marketing you're doing to bring the clients in the door, book them into appointments. So, I'd work backwards from that, is the short answer.

Dr. Nazish Jafri:
Yeah, yeah, perfect. And I think the point that you said is to go out in the community and introduce yourself is one of the best ways, because they can see a new office coming, and if they don't see who is building it or if they don't see somebody, you know, back and forth who there's a face to the office. It kind of falls at the back end of the strip mall. They're like, okay, yeah, there's another dentist. I find that it does take a lot of outgoing B2B style marketing. Take some cookies, talk to them that you're coming in. What kind of patients are you looking for? Or what kind of services are you going to provide? And that is something we didn't do initially. When we had our first two offices, we relied heavily after, I think, 4 or 5 months down the road, when we started getting a little bit of the revenue, because we were actually just waiting on the PPO credentialing websites that our name is going to pop up. And then we were like, okay, from there, patients will start seeing us. They did, they did. And they wanted to come to a new dentist, and there were new people in the neighborhood. But then after a little while, it kind of trickles down. You're like, okay, you need more exposure. Yep. If somebody has a PPO Medicaid practice, and that's what the patients they're looking for. Does the marketing style differ between that kind of practice and a person who just does fee-for-service, meaning they don't take insurance, and they just use cash?

Gretchen Roberts:
Okay, that's what I thought you had asked, but I wanted to make sure I was answering that, right?

Dr. Nazish Jafri:
Yeah, yeah.

Gretchen Roberts:
Yeah, that's a great question. So, from a math perspective, this is both a marketing and an accounting thing. You want to look at cost per lead and cost per client and work backwards from those numbers. And yes, there's a lot of math here. But if you think about it just from a broad perspective. Those insurance-based clients are going to bring in a lower net profit than the non-insurance clients, the cash clients. A lot of our clients on the accounting and tax side, they're moving that direction. I feel like the industry is trying to move in that direction. And we see that with chiropractors and other specialty providers as well. They just don't want to deal with insurance headaches. If you're lucky enough to be building a cash-only practice without insurance, you probably are making a better net profit margin, and you probably can afford to spend more on each lead than if you are running an insurance-based practice.

Dr. Nazish Jafri:
Yeah, that's true because the reimbursements are lower and they're slower as well. And especially like.

Gretchen Roberts:
Cycle problem, right? Now you have a cash flow.

Dr. Nazish Jafri:
Yes, there is a cash flow delay. Quite a lot of delay. Sometimes it's 2 to 3 months, and you don't get it. And then are you going to stop the marketing during that time? Are you going to pause it? Are you going to change it? When are you going to bring it back? And the warmth kind of goes away.

Gretchen Roberts:
Yeah, exactly.

Dr. Nazish Jafri:
Their referrals really work. Going outside in the community works for us. We're like, okay, top-of-the-mind awareness style that we bank on as well.

Gretchen Roberts:
Yes. And professionals are professionals. And the other thing about that, too, and you've probably realized this is you can't just do it once. You have to keep on going in relationships. It's not a one-and-done. And yes, it's uncomfortable, but you also have to think of yourself, as I'm not just a dentist, I'm not just a practitioner. I now own a business. And so, I also have to put on my CEO hat, my sales hat, my marketing hat. You have to put on all the hats. And so, put that marketing hat on, that relational marketing hat. And remember that you're building relationships, and it's not just a one-and-done.

Dr. Nazish Jafri:
Yeah, yeah. You have to survive in that community for a long period of time. So, you want to be there and help them out. And then they can help you out as well with referrals and obviously events, quite a lot of events that, you know, you can merge and get value out of each other. My other question was if our dentist is happy in one place, and now they are looking to scale their practice to the second or third practice. What kind of marketing strategies should they look into now for their ROI and cost per lead? The cost per lead was one question. I get a lot of confusing answers on what the cost per lead is. If you can give us a little background on what the cost per lead is, and break it down in very easy terms, so our doctors can understand it.

Gretchen Roberts:
Yeah. There's a cost per lead, there's a cost per acquisition, and there's a lifetime value calculation. Sorry, we're going to get to math and acronyms. Cost per lead is how much does it cost you to get one lead? For example, let's just use Google AdWords as an example. Let's say it costs $14 per click. That's your cost per lead, right? Cost per acquisition is if you get 100 clicks and you close two people, then that's, you know, $1,400 or whatever that was, you know, sorry. Yeah. I'm trying to do math in my head in real time. I usually use a calculator. Lifetime value is really probably the biggest one. It depends on the kind of practice you have, and how long people stick around. So, if you're just doing a one-off cosmetic procedure, you know, and you never see them again, you do need to ask for referrals as a baseline. But, you know, maybe you have a client once or twice or three times, and then they're just done with your service. That's going to be a different scenario than if you have what we think of as recurring or repetitive revenue.

Gretchen Roberts:
So if you have recurring revenue and you know that an average client spends, I'm making numbers up, you know, $2,000 a year, and they last for five years. That's a $10,000 lifetime value, right? So, you can work backwards from that and say, well, how much can I afford to spend on marketing to get a $10,000 client? If you don't have recurring services, it's generally less because you have to keep the marketing engine going because you don't have the recurrence. However, if you're trying to grow, you have to keep it going regardless. Because if you turn that marketing engine off, even if you're at the right size now, that's not going to help you get new clients in the door. So, if you're starting a new practice, in addition to the one you already have, you not only need to keep marketing at your current practice unless you're literally at capacity and you cannot take any more clients there. But you also have to do the marketing for the new practice, which goes into, you know, how much can we afford and cash flow and things like that. And, you know, are you having the old practice fund, the new practice? And I'm sure you've been through that with your practices.

Dr. Nazish Jafri:
Yeah. A lot. You are so right. The cash value, the lifetime is really important because sometimes we're just spending so much in getting new patients to come in constantly, and then we forget that we have all this treatment plan that is sitting in the graveyard somewhere, and we need to get into that to get our treatment plans to come back, because that is internal. I've learned that over a period of time, I'm like, we're not getting new patients, we're not getting new patients. I don't think it's always new patients that in like a 3 to 5-year practice that's needed. You really need to look into your own treatment plan modules as well and revive some of those patients. Why are they not coming back? And if they're not coming back, why would the new patient come back to you?

Gretchen Roberts:
Yes.

Dr. Nazish Jafri:
And what happened?

Gretchen Roberts:
Like six? Six. It's like six times more expensive to bring in a new client than it is to just service an old client. I have actually observed this. I can tell when dental and medical groups are really good at that follow-up. You know they will get that next appointment scheduled. They'll be calling you. They are on top of their upsells and cross-sells. You know, you call it treatment plan in your industry. But generally from a marketing and sales perspective, it's upsells and cross-sales. That's mining existing clients and going, how do we get them to buy more of the services that they actually need? You've already put the treatment plan together. You know they need it. So, it's a matter of putting infrastructure in place inside your back office to make sure those follow-ups get done. And to your point, I mean, that's probably half the battle right there, is just getting your existing patients to make those appointments and show up, right?

Dr. Nazish Jafri:
Yeah. Be accountable for that. So, they're accountable for their appointment and have systems in place that our team doesn't forget about those appointments. Yeah. And I think most of the times is that they don't, they might not have time, or they might just reschedule the appointments. But the ones that don't show up. I usually am very keen on understanding why they don't want to come back. What had happened in their previous visit? Did we not meet their expectations? Did we oversell? Did we undersell? Did we not hear what they were saying? You know what had happened. So, it doesn't happen to the new patients that you're marketing to because, like you said, they're very expensive to bring in.

Gretchen Roberts:
Yes, exactly.

Dr. Nazish Jafri:
Yeah. Well, those were really, really good points. And I hope some of the new doctors, they can understand why marketing is needed before they open the door, and why community involvement is really needed to show your face and be around, because it really helps. I know your second expert level is tax strategies that you provide services with, and I've heard you say in some podcasts that a tax-only focus can leave like huge opportunities on the table. You're not understanding it correctly. A lot of dentists who are always working in the mouth, they have their handpiece. They just take their receipts like marketing. Marketing agency is going to just give you the invoice, the vendor is just going to give you the invoice, and we just give it to the CPA. And then we think they're going to do everything correctly. So, where are we missing the point here? What would you say to a new dentist to keep their eyes out for?

Gretchen Roberts:
Yeah, that's a great question. So, I would break this out into tax and accounting. Both of those sounds super boring, but let me try to make it interesting for you.

Dr. Nazish Jafri:
They're important.

Gretchen Roberts:
The real goal is to save money, right? So, we all are responsible for taxes. You know, we all need to raise our hand to pay our legal share of taxes. But tax reduction is not illegal, right? And so, the goal is to look for every single opportunity you can within the business and within your personal to say I put this into three buckets. So, the first bucket is sort of like what can I do on a day-to-day basis or immediate basis to save on taxes? You know, typically your practitioner is going to send you a questionnaire, your CPA, and you're going to fill it out, and you're going to be super annoyed by it because you're going to be like, I'm practically doing this tax return myself. But what they're really doing is they're embedding all of the latest tax law and all the latest deductions and all of the latest things into that to ask you, hey, what has changed in your life or in your business that we can now save on taxes for you for this year, right? That's kind of the immediate stuff. You know, just make sure you're in tune with some of the things they're asking you to do, and do it because the goal is to save taxes in the immediate. There's also the idea of projections, tax projections. When you are running an LLC or an S Corp, you know which typical dental practices start as an LLC or a professional liability corporation. And then they turn into an S corporation. You know, that all funnels through to your personal taxes. But you are then responsible for these quarterly taxes. Especially when you're starting out, you have no idea what your income is going to be at the end of the year. And so, we do a projection toward the end of the year that's a true-up. We call it a true-up. Like, let's look back on what we said you were going to do "..." through April. And now let's look at your actual net profit and make some adjustments as needed. So, you're not underpaying or overpaying. Those are kind of the immediate things. And then, like I said, a lot of our dental clients do choose to become S corporations when they hit a certain income threshold because a lot of money by doing that. Right, a lot of times, and I won't go into the nitty-gritty of why. Just know that you do. You save a lot of money. Typically, we can save depending on what they're making and what we think their reasonable salary should be, but we can typically save, let's just say around 15K in payroll taxes, or sorry, in income taxes, because you're not paying self-employment tax when you switch to an S corporation. Okay, so now you're a grown-up. You have an S corporation, you're paying yourself a reasonable salary, and you're taking the rest of these distributions. You're saving on taxes. And by the way, that's not a one-year thing. You know, this rolls over every year where you get those savings. And the more net profit you make, the more you save. It's amazing. So, that's kind of a big lever. And then within the S Corporation itself, there are a lot of different things you can do. Again, I call this sort of like the ten-year plan, right? So, what are we doing for the long-term? We're going to put something into place, and then it's going to be ongoing savings, not just first-year savings. And the S Corp opens up a bunch of new doors for things like that. So, that's bucket two on the tax side. And then the third one is really thinking about your real future with the practice or practices. And what are your goals? Do you want to exit? If so, when do you want to retire? If s,o when? Or do you just want to work until you die? Like on the accounting side, we have all these accounts. The joke is the accounting guys have their desk, you know. But I think a lot of our clients have goals to, you know, build up a practice or a series of practices and then eventually sell them, exit, and retire. And so, that's a big piece of it, too. Is that really long-term planning? I mean, we're probably talking to people who are a little younger and, you know, maybe are just starting up, versus they're ready to sell the practice. But that's actually the time to start thinking about what do I want? When do I want it? And how do I manage it so that when I do sell this practice, it's ready to sell at the highest transferable value? And it becomes my retirement annuity. And, or what am I doing in the meantime in terms of my investments? Are they tax-efficient to where when I get to that point, I can retire comfortably, and then I can choose to work, but I don't have to.

Dr. Nazish Jafri:
That is so right because we also started off like an LLC. And then we shifted it at an S corp because obviously, exactly for the reasons that you highlighted. And these are certain things that you experience as you keep on going because you are trying to play very safe in the first few years or when you're opening up the practice, and you really don't understand the gist of it. Once you actually go in and you start doing the tax returns for the first year or the second year, you're like, what is happening? And then you get introduced to this S Corp, which helps quite a bit with the strategies that they can do and the stuff that you can save, and you can do a lot of things there. When the practice owner is building a build-out, what are your few points? Very easy few points for them to do like a cost segregation study for themselves. Does that help? Is it too much? I know some people say it's too expensive. Do I really need to get it done? But I really think that it is important, and it helps.

Gretchen Roberts:
Yeah. So, you know, again, not to be a lawyer, but I would say it depends. If you're just starting and you're taking out a bunch of loans to buy a building, to outfit a building to start a practice, and you're just super in the hole, and you know, you're going to be taking losses for several years. It may not be an appropriate time to do a cost seg study, because you're already taking all these losses. I'm not, I'm actually not a tax professional. I know just enough to be dangerous. But there, you know, there are limitations on losses you can take in certain categories. And so, sometimes it doesn't really make sense to push all that into year one, when you should be taking it later. When you're in a higher tax bracket, you use your tax bracket. I mean, the first year or two, you might be in a zero tax bracket. And so, you're not really saving anything, right? I mean, you're getting a refund, but a lot of that stuff has to be carried over. So, on the other hand, let's say you're on practice number two. Practice number one is super healthy. You're making a good net profit, a good net profit that could be offset with a cost segregation study, right? And I'm saying that typically, it depends on how your entity structure is set up. But if you've got any practice, it would typically be in a different corporation or LLC. But then the building itself might be owned by you personally or by a partnership, but either way, it passes through to your individual return. So, now you have an opportunity to reduce your taxable income, which reduces your tax bracket, which reduces the taxable income even further, if that makes sense. Yes, it kind of depends on where you're at in your career. And you know where you're at in building out the practice.

Dr. Nazish Jafri:
Something to keep in mind if you're a business owner and if you want to scale. Yeah. Something that is important.

Gretchen Roberts:
And again, if you're in a position where you're making a lot of net income and you can use the cost segregation study to offset some of that, you now have income that you can use to reinvest in the practice in marketing.

Dr. Nazish Jafri:
Yeah. In marketing. Exactly. That's how you bring that marketing budget in.

Gretchen Roberts:
There you go.

Dr. Nazish Jafri:
Right. I really like your answers there. Very, very easy to understand. You also talk about building wealth for families. Again, like you said, the CPA would die at the desk. Sometimes dentist, once their hand is closed, is not working for any reason, disability, or whatever reason there is. We are very dependent on that handpiece. If that hand piece is not working, what are we doing? How are we supporting the family? What did we do? Can you talk about talk to us about a little I've heard, put the kids on payroll, and there, you know, there's like a domino effect. That money can go here and here, and you build the wealth, just in easy terms. What should we be looking out for?

Gretchen Roberts:
Yeah. So, you mentioned one of the very popular strategies with a lot of dental practice owners is hire your kids. The big picture idea in terms of so, let me break it down this way. Within the practice, you want to do tax-efficient things that push net income down to you. And so, we can talk about that. We can deep dive into that in a moment about some of the things you can do. And then once you have that net income pushing down to you, the goal is to not to spend all of it, but to strategically invest it in a tax-efficient way. Because, especially if you start early, if your investments are tax-efficient, they compound at a much higher rate than if they're not tax-efficient. There's a real thing called a tax drag on investments. And so, you know, when you're starting out, there can be a huge difference in compounding returns when you have tax-efficient versus not. The first goal is I need more net income so I can invest more of it, because otherwise it's just all going to my lifestyle, right? And you want to start that early. How do you get more net income in the practice? There are a lot of strategies. One is you just mentioned hiring your kids. That's shifting income down to a lower tax bracket. That is definitely something you can do. There are some rules around it. I will qualify. It's not, you know, you can't just put your kids on payroll and not have them do anything, and they're two years old. There are some IRS rules around that, but that is one example of a strategy. Another one is if you already know that you want to put in a retirement plan to be competitive in your market, you know, so there are some ways to do that, that where you can get some tax credits on it. And then you yourself have now have a vehicle to push money and tax free into a retirement account, and max that out. There's a lot of different ones. So, there's pushing it down, pushing it forward. So, delaying tax payments basically to another time. But yeah, there's a lot of different strategies. The S Corp opens up a lot of different things. The other piece I would say too is within the business itself, besides the tax stuff, because the way I think of the tax stuff is, yes, you can do all these things, but some of them require some documentation. They require extra paperwork. Maybe you don't want to deal with all that. So, what are some of the ways you can drive more net profit down the line? And I would say the answer there goes back to what we were talking about with marketing and, you know, understanding, you know, the gross margin on your core products and services as well as the overall revenue stream of them. So, you may have a service that, you know, brings in a huge net margin, comparatively speaking, but it's only 5% of your revenue. And so, then the question is, well, can we do more of this or do we need to focus elsewhere on, on, you know, something that is more the majority of the revenue, but it brings in a smaller gross margin. But, you know, focusing on it from that sort of line item perspective. Those are the details that are found in your PNL, or they should be found in your PNL. That can drive profitability at the bottom end, you know? And so, there's this balance, like you're trying to drive profitability and do strategic tax savings, which also adds to your profitability, which therefore you can invest and, you know, and then you can retire. Yeah. Financial retirement. So, it's not necessarily that you have to hang up your dental tools, and go off into the sunset at the beach. It's more like now I have the choice.

Dr. Nazish Jafri:
Yeah. Yeah. Now that I have the choice. Yep. And then this all comes down to good, clean books, right? This comes down to how you're keeping your receipts and PNL very, very clean. Some we started off with QuickBooks, and some of those days were messy. We didn't know what we were doing. And it hurts because now we're starting to understand that, you know, you have so much opportunity. And because your books are not clean, it's expensive for somebody to clean it, to hire somebody to clean it. And then you realize that I don't know where all this money went. And I've been working so hard. So, it's like you wanted to get out of an associate position from a job, and now you think you're an owner, but you're not an owner. You're a glorified. You have another glorified job for yourself, which now you own it.

Gretchen Roberts:
Yeah, absolutely. I really strongly believe that owners are the ones who take on all the risk, and they should reap all the reward, not all the reward. They should also reward their team, but.

Dr. Nazish Jafri:
The majority of it.

Gretchen Roberts:
Yeah, the majority of reward. And if there's nothing left over, it's really discouraging. I do think that your books tell a financial story, but that's also a business story. So, the way we like to think about it, we have these broad buckets that we break things into. And dental is actually a little bit different from other industries, for whatever reason. But you know, as an example. So, let's say as a KPI, staff compensation should be between 25 and 30% of your overall expenses, right? And if you don't have that properly documented, and if you just have that dumped somewhere or it's all over the place or whatever, you know, how are you measuring that against KPI in your industry? And once you do have the number, you're like, oh, we're at 40%. That's really bad. We should be between 25 and 30. Why are we so high? And you have to dig into that, you know. Are we charging enough? Do we have enough clients coming in the door? Are our team members efficient when they're doing the work? You know, these are questions you have to dig into. And that's what I'm saying. Like the numbers in your books tell a story. And so, this may be a story of we don't have enough patients, and we're overstaffed. Or it might be we have enough patients, but our staff is slow. Or it could be, back to what we were saying before, you have these treatment plans, but nobody's calling them back and booking those appointments. And so, how do you get those staff costs lower? And back to the KPI? Now you have some avenues to explore.

Dr. Nazish Jafri:
Yeah, I think you're right about the payroll because right now the payroll is skyrocketing, and I can say it for ourselves. I can say it for any other new dentist or maybe somebody who's been in business for 20 years. The salaries that were being paid ten years ago, that's not what's being paid. The people that you're hiring right now are not like the ones that we had. So, the older generation was different. The newer generation is different. The demand more, they put in less and our payroll is just higher and higher. And if now you have a PPO or a medicaid practice, now you're on a negative because you need to keep those people one and then the reimbursements not coming in and you're just like, working the grind in there. Keeping the books and understanding where your payroll is going is important. And that's how I think you're going to dig into the treatment plans more to find those patients, to bring them back in so the revenue can increase. Because I don't think at this point in time you can cut the payroll off. Just the demand is like that. Just the service fee for running those payrolls is so high.

Gretchen Roberts:
Yeah. I mean, that's definitely a balance. And you don't want to let good people go when you've managed to get them, you know. If you say, okay, well, I'm not letting anyone go, even though we're over capacity, we have too many people for the work we have. Then the question is, how do we get more work in the door? Or how do we become more efficient about the work that we're doing?

Dr. Nazish Jafri:
Yeah, yeah, yeah. How do we become more efficient with the work? I think that is important how, becoming more efficient and making sure that the fee schedules that you have are being looked at as well. So, you're not working on a fee schedule. That was like five years ago. And everything's changing. So, keep an eye on those things to make sure that you know. So, we've talked about a new grad who's thinking of getting into business and marketing and all these tiny little things that they can implement and think of it right away. Somebody who has a few practices like 10, 11 practices, maybe 3 or 4, and they're thinking of giving it to a DSO, or they're thinking in their plan, they might want to sell it to a DSO. What kind of financial work they should be doing right now. So, they're not struggling at that time with the DSO asks for all those panels? Yeah. What are your takes on those?

Gretchen Roberts:
We've been through this with several clients. So, there are a lot of asks. And so, you have to just be prepared to be on top of that. The first thing is make sure your books are up to date, reconciled. Your balance sheet is up to date. Those are core things, right? Don't neglect that stuff. And a lot of people who have maybe an office manager doing their books or they're kind of DIY, you know, at nights and weekends, if they have 1 or 2 practices, they didn't major in accounting, and they may not really understand what needs to go onto the balance sheet versus the PNL. They may not understand how to reconcile the loans, or, you know, they might understand sort of the fundamentals of reconciling bank accounts. But if you're missing some of that other stuff, somebody, you know, who's doing financial due diligence on the buyer end, they will notice all that stuff, and they will ding you for it. So, that's one thing. And then another thing is this is typical with s corporation owners. You're running as much as you can through the practice, right? There are certain things that you can say, hey, you know, we're going to let's all agree to subtract these things because these are just my personal expenses. Practice is really, you know, at least a year, maybe two, before you want to sell is you need to stop treating it like your personal bank, you know, and start treating it like a business, and start maximizing the profit instead of minimizing the tax, because they will look at the tax returns. And so, if you spend a couple of years beforehand, you know, taking out some of your, let's call it boondoggle stuff or, doing to minimize your taxes to maximize your sales price and your sales valuation. That can pay off pretty exponentially. Yes, there are some cases in which you can get them to agree that this huge list of things isn't real and that they need to subtract it or add it back into the net profit, right? It's called selling tax. But you know, in buy-sell relationships, they don't always agree on what those are. And let's just say we're talking about $100,000 worth of, you know, expenses that you're saying, hey, this should go back into the PNL. And the buyers says no it shouldn't. And if you're selling at a 4x, that's $400,000 you just lost instead of whatever you got on the, you know, the tax deduction for the last year.

Dr. Nazish Jafri:
You're right. Don't treat it like your personal bank.

Gretchen Roberts:
Yeah.

Dr. Nazish Jafri:
Yeah. Don't treat it like your... And I've seen a lot of issues happen because they think that they can sell it at a 10, 4x, 5x. And once the PNL is coming in and they're doing the due diligence, they're just like going through the books like crazy. And you've taken so much dividends out, or you've used on credit cards and stuff, and it doesn't show that there is profit in it, because that's what those dsos are looking for. And I think this is important to look at because either you're going to give it to a kid of your own, if they do become a dentist, or you will have to sell. There are only two options. There is no third option. Or you just close the doors, you pay the rent and the mortgage. Yeah, yeah. So, it's very important for people to look at even with our associates. I keep telling them, I'm like, you have to know what your exit strategy is. I know you're 22 years old. I know you're not thinking about it, but you should know it at least a little know-how of where you're going to end up. Because then, just like you said in the beginning, backtrack it. Just like what you what kind of patients you want, you backtrack and figure it out from there.

Gretchen Roberts:
Exactly.

Dr. Nazish Jafri:
Yeah. Yeah. We are almost at the oh wow, we're at almost 11:50, almost right there. I just have like just a few more fast questions. What is one hidden business deduction that most dentists easily miss? Looks like personal expense, but it's actually a practice right off.

Gretchen Roberts:
I'm trying to think. Nothing comes to mind. Honestly, I think, you know, I'm thinking about our clients. Most of them are really good about documenting their business expenses as business expenses. What do you have? What? What do you think? I'll turn it around on you.

Dr. Nazish Jafri:
Sometimes I think like travel. It looks like a personal expense. But we have like CE courses that we go to, and we go to these events, and sometimes we take our dental assistants there, we take our associates there. So, it might look like it's a personal expense for us, but it can be a legitimate practice write-off because we are going to an event which is going to serve us in our education or in our dentistry.

Gretchen Roberts:
Yeah, that's a good one. And it's funny that you bring that up because when you first asked me, I thought of the opposite, which is that we once had a dental client and he was married. And he went, he went to a work conference. And this was all in his QuickBooks. And we were processing it, and there were several receipts for strip clubs.

Dr. Nazish Jafri:
Oops.

Gretchen Roberts:
So, you know, our standard question is what the expense? For what is the business documentation for this expense? And he didn't really have one. So, we put that down to personal distribution.

Dr. Nazish Jafri:
Yeah, you're right. That happens too. So, personal distributions, they become business write-offs. And I think those get muddled up with travel, meals, and events. If you host like meetings and you have meals in there. So, those can kind of get muddled up a little bit. We usually keep like separate credit cards for each of kind of the department. So, this is the marketing one. This is the travel one. And I've learned to keep it separately so it doesn't get like once we get the sheet from the CPA bookkeeper, we're just not like thinking, oh, I don't know, where did I spend this one at? So, we've started using credit cards for specific things so we don't get mixed up.

Gretchen Roberts:
That's a really smart way to do it. You know, I don't know about you, but I can't remember what I ate for lunch yesterday, let alone what my Amazon purchase from two months ago was.

Dr. Nazish Jafri:
No. Yeah, and Amazon purchases get muddled up, too, because it's one login and you're buying it for the office. And sometimes you also like, oh, I see this, and I think I need it for my fish tank. And you get all the six things in it. Yeah. These things are very real. They're very, very real. Oh, well, thank you so much. I really appreciate you making a lot of topics so easy to understand. And I think we have all your info to get to you if somebody would like to get in touch with you. I also wanted to know what the step looks like. What can you help a dentist with? I know it starts with your advisory company. It's taxing. And they can get like tax strategies. What does the onboarding process look like? Because I know yours is a little unique.

Gretchen Roberts:
Yeah. So, typically we when we work with clients, we will do their monthly bookkeeping and accounting. We deliver monthly know your numbers financial reports. This is kind of the compliance piece, right? You know we'll do their tax preparation and filing tax projections. And then beyond that is our advisory. So, that's our tax advisory strategic tax planning. And that's more of that sort of ten-year idea and wealth management as well with our family office. And then we also do, we call it Breakaway Business Growth Accelerator. The idea with that, it's sort of like it's financial coaching on a monthly or quarterly basis. And it's not so much, a lot of people are like, I need something between just getting monthly reports and having, really sophisticated cash flow projections. I don't really need that level, but I need something in between there. And so, we have a program for that where we're really looking into some of these books and looking at specific ways with specific projects to make sure that they first, you know, are understanding what their KPIs are, benchmarking against the industry, maximizing their cash flow, and a bunch of other little projects in there. Everything from the speed of invoicing and getting payments back in, managing your merchant fees. Just all those financial things that all can combine to add to a much bigger bottom line in terms of onboarding. Sometimes we have to start with clean-up, like the books that haven't really been cleaned up for a while. And we'll go back to the previous year's tax return to do that. And that's a little bit of the slog phase, right, where we're trading paper back and forth and lots of questions, and get everything getting all the gears grinding again. Once we do that really nice monthly cadence. And, you know, we're delivering regular financial reports. You know, we're working through the tax savings blueprint and executing on those projects. And we're working through the Breakaway Business Growth Accelerator project so we can help you, you know, really tidy up your PNL and your balance sheet and drive more cash to that bottom line.

Dr. Nazish Jafri:
That's really good. That's very thorough. If somebody already has a bookkeeper and a CPA, can they approach you for other financial or track strategies, calls, or inputs?

Gretchen Roberts:
Yeah, for sure. I mean, we'll do tax. We'll do tax strategy with anyone, even if they don't want to switch their current CPA ... And the same with Breakaway Growth Accelerator, that's layered on top of monthly bookkeeping. So, as long as the numbers are good, I am happy to do that with anyone if they want to.

Dr. Nazish Jafri:
Okay, yeah, that's really good because a lot of times they're already deep into with their firm and but they want some outside input, which your expertise can bring in, and it just opens up a lot of horizons. Sometimes those CPAs are tied up and they don't give you those ideas, which a third person can give, and maybe you can bring it in because you're looking at it through a different lens. Well, that's really encouraging to know. That is very, very encouraging to know because sometimes we think, oh, we have a CPA, we can not go anywhere else because nobody's going to take us. So, I'm stuck with this person.

Gretchen Roberts:
Yeah.

Dr. Nazish Jafri:
Right.

Gretchen Roberts:
You can always make the switch. You can not make the switch. It is hard to switch CPAs because, I mean, it's a big relationship. It's a very embedded relationship. But you know, sometimes people just find they've outgrown their current CPA. They do want more than just compliance or are ready for advisory. And that's what we're here for.

Dr. Nazish Jafri:
Yeah. Perfect. Well, that was very reassuring, you know, you can have we can have the services from your company and not bother our CPA. So, that's very, very reassuring. Well, thank you for tuning in today, and I hope your knowledge base has a little good know-how with today's episode, and it gives you good insights that you can take back to your practice and your life. If you want more coaching or more information, once this podcast is done, we will have a QR code and all the information to reach Red Bike Advisors and Miss Roberts. So, thank you again. Again, if you enjoyed this episode, please do not forget to subscribe or leave us a review. You can follow us on social media as well on SecureDentalGroup.com. I am your host, Nazish Jafri, and thank you, Miss Roberts. Today's conversation was very good.

Gretchen Roberts:
Thank you. It was a pleasure to be here.

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