Work from home. This is the single largest way to save on overhead costs. Unfortunately, this is not realistic for our profession. Commercial facility cost are inevitable. Monitoring these costs is the first step towards minimization. Many times we have no idea how much we are spending on water, electricity, phone, and the other plethora of expenses that go along with our facility. Using tools like smart thermostats, water valves that are turned off at night, VOIP phone systems, and re-negotiating rental contracts can go a long way towards lowering these costs. However, if you don’t know where you are with these costs you can’t know what you need to adjust.

Market through networking. Not only is networking the most effective means of marketing it is also the cheapest. Keep your overhead costs low by attending as many networking events as you can. Target your direct mail as much as possible. You don't want to pay to fill up someone else's recycling container. Using geofence technology and basing your mail on household income levels helps to hone your marketing dollars. I use a service called Viva Concepts that runs my geofencing, internal marketing campaigns, and external marketing campaigns. I also have hired and trained a dedicated marketing executive to run all my campaigns including social media. I have tried doing this myself and even paying companies to post to social media for me. These plans proved to fruitless. I will have more on this topic in future posts. Just remember that it is imperative to track these numbers and know what your ROI is for each campaign.

Stay away from product sales. Do not put your cash into products. This represents an overhead cost whether you sell the item or not. Sure you may miss out on some sales margin revenue but the overhead costs and the aggravation are generally not worth it. I have found that the costs don’t justify the effort needed to put into these products. The only product I sell now is whitening, which I usually give away for free in marketing campaigns. Almost all other products are given away or given via a prescription.

Avoid high price consumer advertising. If you want to keep overhead costs low, steer clear of expensive ads for the Yellow Pages, advertising in coupon packs, or advertising in large newspapers. The audience is not targeted enough for your needs.

Watch your lab and supply costs. These costs can vary dramatically based on a tremendous amount of variables. These are the two areas that became very difficult to manage as my practice grew. As your employee count rises your ability to manage what is being ordered becomes more difficult. This is where tracking metrics, communication, organization, and leadership are imperative. If these metrics are not controlled you will see growth in your production but not realize growth in your net income. Believe me on this one, it happened to me and is the number one reason I developed this website and software. In future posts I will go over how to track these metrics and how to assign staff members to remove the burden from you.

Staffing costs are the biggest hit to your bottom dollar in a dental practice. Tracking and managing this number is imperative to controlling your overhead. Once you have a firm grasp on this number you will know how and when to bonus your employees, when to hire, and determine if you are getting proper production from the staff you have. We will cover this extensively in the future.

The Bottom Line on Overhead Cost

Overhead costs aren't retrievable in terms of billable hours. They are spent regardless, so it makes good sense to keep them as low as possible. Keep good records and analyze your overhead costs on a regular basis. TRACK, TRACK, TRACK! You cannot manage what you do not know about. Try to find ways to cut these costs and make business decisions that keep overhead costs to a minimum. You need to keep a positive cash flow and high overhead costs are the quickest way to drain your cash away.