Podcast Reflection 09/27/20

Dentistry Uncensored with Horward Farran – Wes Read, CPA, CFP, of PracticeCFO on Running a Financially Independent Practice

Key Points

- When you set up a 401K for your employee, the doctor is a trustee.

- The doctor needs to put money in the right spot/do the tax deductions properly.

- Choose a CPA that works with dentists.

- There is pressure on dentistry due to DSO and insurance companies.

- You need to think of yourself as a CEO when you own a dental business.

- A CPA is more of a historian, while CFO figures out the future. Can you afford a 10K salary for a CFO each year?

- The advantage of a DSO is that they understand business, HR and marketing. It is in full stride and only going to increase, probably to taking over 40% of the market.

- PracticeCFO works with people with fewer practices.

- A benefit of scale occurs when operations have at a specific place and standardized method, beyond supplies. You need to monitor your expenses. If your expenses are increasing more as you get more practices, something is really wrong.

- A regional DSO can be defined as anywhere between 6-20 practices.

- Group practices with one layer of management can be easier to scale.

- Radio ads these days are very cheap.

- When filing you need to think of taxes, depreciation and strategy.

- Produce and create great culture and delegate to great people

- In terms of COVID-19, EIDL is not forgiven and accrues 3.75% interest. PPP is forgiven if you file for it correctly. Keep funding 401K and contribute to retirement plan. This is not best time to file for 179 bonus depreciation or buy new equipment. Don’t put loan money into stocks; it’s not legal. Use this as a lesson. Keep 6 months of living expenses fluid and also 1-month worth of capital for your practice. PPP is taxable money (not income, just can’t write it off).

- Dentists tend to live beyond their means. He sees a lot of students come out with pent up consumerism and spend too much out of dental school. Keep living like a dental student. We have a need to let people know about our financial status.

- Marginal thinking is a chronic problem. Stop buying things that lose value over time à consumer debt

- As a business owner you earn your production and passive profit. As an employee you only get a part of your production. The first 3 to 5 years are hard. There is no perfect time to own a practice.

- There is a lot of COVID-19 externalities that are not being quantified à depression, suicide, home abuse and business loss.

- Right now, is not the right time to sell a practice, since few people want to take over with lower production.

- Save money so you get liquidity to buy a practice!

- On refinancing: keep your loan’s monthly payout as low as possible, because if you re-finance and your payment is high, it’s harder to get a loan to buy a practice.

- If you have already bought a practice and funded the retirement plan, then it’s probably time to refinance at a lower rate and specific time frame


Associatesonfire.com à new resource for business information you should have learned in dental school. You can even get AOF certified.

- Refinance student loans – fuel cell 1, video 3

wes@practicecfo.com à they will respond if you need help. They are on a 24-hour response rate. Free consultation. They want someone that is north of a million dollars in collections.

They use the THRIVE formula

- Teamwork

- Highly innovate

- Responsive

- Industry experts

- Value surplus

- Extreme ownership


I am familiar with the concepts introduced in this podcast due to a 2019 Minnesota Dental Association Entrepreneurship. Of course, it was nice to revisit the topics and see the CPA take on the concept.

I like that they touched on living frugally after graduation. Being able to earn a high income, while having no desire to impress anyone is the greatest formula for retaining money and building wealth. This is counterintuitive to the culture we have grown up on, but if you can step out of the matrix and re-program your mind, it’s the ultimate strategy. I’ve never been too focused on impressing others and have been budgeting my expenses from a young age, so this should come easily. I think the biggest thing is to surround yourself with individuals that encourage the habits you want. Set up your environment for success.

I’ve been pondering the idea of working with a DSO and it looks like that is not the direction for me. I do want to own multiple practices, so I’m going to be increasingly mindful of creating systems that can translate across practices.

This podcast alluded to the idea of “good debt”. Many people want to pay off debt as soon as possible, so they may decide to refinance their loans; however, this would be counterintuitive to building wealth. Since you would have a higher monthly payment, you would be in a weaker position to receive a loan and build your wealth at a faster rate in an owned practice. Think about the long game: as long as you are earning at a higher rate than the interest rate you are accruing, you’re building an empire.

My next step is to look into practice taxation models. As an owner, you may be paying as high as 60% of your revenue in taxes. This includes your income and that of your employees. I want to see if owning a practice is the best use of my time resources and income.

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