‘You need to take action now’: With the current economic circumstances, the Dental Business Coach, Chris Barrow, explains why it’s necessary to revisit your cashflow forecasts for the rest of the year and into the next.
I wonder whether I really need to explain how important it is right now to revisit your cashflow forecasts for the rest of this year and into 2023.
And there are three reasons why you need to do this.
1. Increased overheads
The first of them are your increased overheads.
It’s necessary to go through every item of overhead and to review what’s happening as the cost of living rises around us.
Whether that means energy costs, or the cost of servicing debt as interest rates rise, or the cost of payroll as wage demands come in, this is important.
2. Variable costs
Let’s also look at your variable costs.
This will include your laboratory fees, materials costs, and also the cost of your self-employed clinicians.
It’s only a matter of time before your lab come knocking on the door to ask for a price increase because of their increased costs.
The same from your supply companies.
You will know that it’s becoming increasingly difficult to recruit, to retain and to remunerate the self-employed clinicians within your business.
They are costing more if you want to keep them.
3. Recession sensitivity
And then finally – and almost negatively, I’m sorry to say – it’s necessary to make some adjustments in your projected sales figures.
This is because there are certain products and services that are recession sensitive
What will happen is that you will see your revenue start to fall.
This usually manifests itself in the form of a gappy hygiene book. Then through into your preventative maintenance programme. And finally, into the delay, deferment or declinature of higher value treatment plans.
So, sales go down, costs go up, profit reduces.
You need to take action now in order to make sure your targets for the final quarter of 2022 and your projections for next year are realistic given the economic circumstances we all face.
Good luck. Keep count. Thanks for listening.
Catch up on previous Dental Business Coach columns:
- Dental news: half empty or half full?
- Knowing your own capabilities and limitations
- Stagflation and the next ‘crisis’ in dental hygiene
- We need to stop using the word ‘crisis’
- Pay rises and dealing with inflation.
Follow Dentistry.co.uk on Instagram to keep up with all the latest dental news and trends.
