Rent and equipment is a huge part of overhead. But there are other costs hidden in those categories! In this episode, Kirk Behrendt brings back Robyn Theisen, one of ACT’s amazing coaches, to continue the series on overhead and break down facilities and equipment percentage. To find out where else your money is being spent and how you can improve your overhead, listen to Episode 988 of The Best Practices Show!
Learn More About Robyn:
Learn More About ACT Dental:
More Helpful Links for a Better Practice & a Better Life:
Main Takeaways:
Quotes:
“[Facilities and equipment are] often fixed expenses, and there are clues as to what those expenses are. So, it's looking at, does the space and what you're paying for it fit what the practice is doing? Are you optimizing that space in order for that to be the right size for the overall percentage of what your overhead is? So, really understand if it fits into that margin and fits into that correct percentage. Then, a lot of times, [are you the] right size for the practice? If you're paying for an expensive space in a retail space and your production isn't matching that, there are questions that come up of that even being a fixed expense.” (3:13—3:55) -Robyn
“[Facilities and equipment percentage being] around seven or eight percent is what you're really looking at. Eight percent of that facility is in overhead, so looking at that metric and keeping that would be a healthy number. Some of the other things that fall into that are looking at your equipment. If you have a lot of repairs on your equipment, that falls into that. So, are you servicing them correctly to make sure that your equipment is in good, working order? Repairs can quickly add up. You also get people who want to sell you equipment. Does the equipment make sense, and does it fit into your overhead? Are you really going to get the ROI out of it that you're promised you're going to get? So, asking some of those questions outside of just the facility piece or just your rent or mortgage, those are other areas or components that fall into that that you could consider.” (4:09—4:51) -Robyn
“You want to review the space. Are there treatment rooms that are not being used? How do you utilize the space to make sure that you are maximizing things? Is there technology that you have invested in that is sitting there, collecting dust, that you could bring in to start impacting that production story that you were talking about earlier? Is there technology that needs to be there? What is the ROI on any purchases that you have in the equipment category? Do you have a team member who is making sure that you have scheduled maintenance to make sure that your equipment is taken care of? Some of those things that get overlooked are those costly repairs and things. Do we have regular maintenance happening? Is that scheduled? Do we have someone who is really managing that and making sure that that happens? So, having an equipment coordinator on your team, maybe the person who oversees all of that and makes sure that you have everything in working order.” (6:33—7:26) -Robyn
“The biggest piece of this is starting to track the numbers and doing them correctly. So, not for all, but for a few of the practices we coach, it becomes garbage in, garbage out for the first quarter. They don't even know how to categorize these expenses; they've had bad accounting in the past. But I will tell you, once you get them in the right categories and you're getting accurate data, it might upset you at first when you see these percentages. But the more you do it, the clarity allows you to be able to make better decisions and know where these percentages are. And it's the small costs like this that can really creep up and eat into your overall profitability.” (7:49—8:33) -Kirk
“[Understand] exactly what falls into that category, because typically it's, ‘Oh, it's my rent or my mortgage payment.’ Well, there are other pieces that impact that, and really understanding what portion those other pieces contribute to that overall facility and expense makes a big difference because you could find hidden things within those other categories outside of your rent payment.” (8:38—8:58) -Robyn
Snippets:
0:00 Introduction.
1:54 Facilities and equipment percentage, explained.
2:50 How this percentage impacts your practice.
3:56 What is a healthy percentage for this metric?
5:27 Are you paying yourself rent?
6:17 What you can do to impact this metric.
9:02 ACT’s BPA.
Robyn Theisen Bio:
Robyn Theisen brings an entire life and legacy of dental experience to the team and every team with which she works as the daughter and sister of dentists. With almost 20 years of experience in dentistry, her roles ranged from practice management to operations at Patterson Dental to coaching teams. Robyn’s passion is empowering teams to realize that they can dramatically impact the lives of the people they serve by implementing skills and systems to remove barriers to life-changing dental treatment. She has done it for decades and does it every day with dental teams.
Outside of coaching, she enjoys time with her husband, Rob, and two daughters, Emerson and Ruby. She loves traveling, music, fitness, and cheering on the Michigan State Spartans.