There are only two ways to increase profit in a small business. Make more or spend less. Most dentists invest a lot of time and money into making more money – marketing to generate new patients, learning new procedures, improving collections, you name it.
When was the last time you looked at ways to spend less?
Cutting Costs = Greater Profitability
When you cut your overhead, you increase your profits. Day after day. Year after year. This happens to be one of my strong suits – I can cut costs better than anyone. Now, I’m not talking about staff compensation or benefits – and I’m not talking about using cheaper, assumedly worse performing dental supplies or equipment. I am talking about looking at your expenses each month and looking for commodity-type services that could be reduced.
Know Your Costs
First of all, you have to know what you’re spending! Look at your most recent credit card bill and choose one line item that costs you several hundred dollars. Next, find out how much you spent on this service last year – and the year before. How much have you spent year-to-date?
Ask Vendors For Savings
Next, call the company and talk with the representative about your account. Tell them how much you’ve spent with them the last few years and ask them if there is any way you can save money. I did this once with our cable company providing us internet services – and they put me on a promotional package that saved us several hundred dollars each year – as long as I signed a 2 year contract. Great!
Compare Vendor Pricing Regularly
Perhaps your current vendor can’t save you any money. That’s fine. You may be already getting a great deal. So, your next job is to find out – are you in fact, getting a great deal? The way to find out is to call a few competitors – and ask them how much they would charge for similar service. Most likely, they will be excited to talk with you because just like dentists love to get new patients, companies love to gain new customers! They may offer a new customer special – and as long as you’re not tied into a contract with your current vendor, you can switch.
One caveat here – I never go back to my current vendor and tell them, “I just talked with your competitor and if you can match their price, I’ll stick with you.” I never share pricing with competitors. I believe this isn’t fair to the businesses. I would hate it if patients did that to me, so I don’t do this to my vendors. Plus, to get a great deal, you don’t need to! Let’s say a competitor offers me a great deal to switch to his company. Next, I need to make sure I’m comparing apples to apples. Write down exactly what service I am receiving from my current vendor and ask all the details – is there a shipping fee? Is there a processing fee? Is there an additional % charged for gas price adjustments?
Ask Vendors for Best Price
Next, I call my current vendor and let them know that I am comparing services and pricing with their competitor. I ask them to give me their best deal and then again, confirm that I’m comparing the same exact service. I may find that my current vendor actually provides more for my money and decide to stay. Or, I may find that my current vendor just can’t match the deal I’m going to get from the new vendor – and I switch.
As office manager, if I am successful at saving money, I make sure I tell the dentists! I want them to know when I am successful. Plus, it helps them to recognize how much we spend on our vendors and also be on the lookout for a better deal. My favorite thing is to start out a dentist meeting with a list of items that I’ve saved money on – and then I forecast a full year’s worth of savings to our practice. In this tight economy, my ability to talk with vendors and reduce our costs has made a significant difference in our profitability.