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| Cash Reserves are the Canary in Your Coal Mine
Kirk Behrendt
Speaker & Coach - ACT Dental Practice Coaching
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Financial analysts and pundits claim there is substantial evidence that we are coming out of the current recession. The truth is that nobody really knows how long the current challenges of this economy will continue. One thing is for sure, regardless of what happens, it is best to be prepared with one thing: cash reserves to allow you a little breathing room during these difficult times.
Let me say first that I don’t believe money is the most important thing. Not by a long shot. I’ve never believed that. What I do believe is that the “lack of” can cause extreme pains for anyone today. It creates challenges for us that force us to compromise in the worst ways some of our most important core values of family, health, dinnertime, security, time off with family and stewardship. With “lack of money” comes the propensity to work harder and harder and cross more lines to get it, just to stay ahead of our bills. It can make a lot of dentists miserable.
That is why cash reserves on hand are the canary in your coal mine.
Early coal mines did not feature ventilation systems, so miners would routinely bring a caged canary into new coal shafts. Canaries were especially sensitive to methane and carbon monoxide, which made them ideal for detecting any dangerous gas build-ups. The bright yellow canary birds were an early coal miner's life insurance policy. As long as the canary in a coal mine kept singing, the miners knew their air supply was safe. A dead canary in a coal mine was an early indicator that imminent danger was ahead for everyone under the current conditions.
Cash reserves act in the same way. When the cash is gone it is an early indicator that imminent danger is on the horizon for everyone involved. Once the cash runs out (and the credit is gone) you are officially about 60 days from being out of business. It is at these points that we just can’t afford to get sick, get hurt or have 20 inches of snow. These setbacks without any cash reserves on hand can send a tight practice into a tailspin.
What further exacerbates this condition is that the credit has all but dried up or become extremely difficult to get. Traditionally, if a dentist got into a tight spot they could call their lender and get an unsecured line of credit within a few hours. Not only are these credit lines harder to get, in some cases we are hearing about dentists that are having credit lines retracted without even notifying the dentist.
Make sure you have cash reserves on hand to deal with any possible challenges that could show up on the bumpy road of entrepreneurism. Make a commitment to keep the canary alive by always keeping 3 months worth of expenses (including your salary) on hand to give you peace of mind, security, and the ability to breathe without compromising the very core values you hold most dear to your heart.
Hope to see you soon!
Kirk Behrendt
Speaker & Coach ACT Dental Practice Coaching 800.851.8186 Kirk Behrendt is the Director of ACT Dental Practice Coaching. He has lectured all over the United States to major meetings and study clubs. He has extensive experience on practice profitability, team building, leadership and dental practice marketing/branding. Kirk and his team are primarily focused to positively impact the future of dentistry one practice at a time. You can reach him at 800-851-8186 or email him at kirk@actdental.com |
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