In this Podcast, we continue our deconstruction, decoding, and deciphering of the key financial statements. This Episode is about the INCOME STATEMENT.

The Income Statement goes by many other names and aliases, Profit and Loss Statement, the P&L, Revenue Statement, Statement of Financial Performance, Earnings Statement or Statement of Earnings, Operating Statement, or Statement of Operations. I’ll stick with calling it an Income Statement.

Of all the financial statements this is the one you are probably most aware of and check because is contains one number everyone wants to know…the Bottom Line, or Net Profit.

An income statement is much like a report card. It is always calculated over a given time period, typically one month. Understanding this, we can better see that the income statement affects the balance sheet much like how an individual grade affects your GPA.

Tune in for a great introduction to what's inside an Income Statement.

Know Your Numbers! Welcome to our series on “Cracking the Code”, or “Deciphering Your Practice’s Financial Statements”. We will spend the next 3 Podcasts reviewing, deconstructing and dissecting the 3 financial statements you should be reviewing at least monthly; the balance sheet, the income statement (P&L) and the statement of cash flows.

No matter where you work in your organization, you’ll do your job better if you understand basic financial concepts. You’ll be a more effective contributor to your company’s efforts to make money and grow the business. You, as the doctor, are in the very best position to understand what resources and assets must be acquired to deliver exceptional care. Ensuring an excellent financial return on those assets just makes good business sense.

Facebook, tweets, free consults, free bleaching kits, iPad giveaways all are tactics, not strategies. Strategy persists while Tactics can come and go. Your Business Strategy cannot be delegated, it must be conceived and executed from within an organization. Creating that which can not be easily copied is a hallmark of a successful strategy. New and unique offerings create a Competitive Advantage for your firm necessary to create the greatest value for your customers.

Today there is a new Strategy framework that is growing in popularity called Blue Ocean Strategy. I wish to introduce some of its Ideas here. This is an improved alternative to the intense industry competition and rivalry of Red Oceans. Blue Ocean Strategies emphasize Creating Not Competing, Creating New Market Space and Not Competing in the existing space. Again, Create don’t Compete.

Tune in here for a primer on Blue Ocean Strategy and Create, don't Compete in your markets! Your customers will thank you and so will your Bottom Line!

Dentists are well capable of learning basic managerial and organizational skills needed to run their practices, an MBA is not required! Dentists completely relinquishing all ownership and business functions to a Management Organization, ie, DSO is an extreme solution, especially when options exist that other practitioners have figured out. That’s why there are Business Coaches, Consultants, and Advisers as well as resources at the ADA to help educate practitioners about business and management.

An effect CEO, or Practice owner, does not need to know all the answers, nor should he! The critical skills for an effective CEO are to be observant, ask the difficult questions and surround himself with a highly knowledgeable C-Suite of executives or consultants who can find those answers. Dentist leaders are uniquely qualified to bridge the gap between business and clinical practice. Because only they can see both sides, they can help their practices and organizations take outstanding care of their patients, while deploying resources and assets wisely.

Remember you can become the CEO of YOU!

The big news in dentistry is the announcement of Aspen Dental-branded Offices opening in 2 Walgreens located in Florida.

This announcement of the Aspen/Walgreens partnership will serve as an example for all the pundits to repeat the rhetoric that the solo dental practitioner is a dying breed and that the dentistry of the future will be delivered through a DSO corporate structure with an employee dentist, rather than an owner dentist. It has already been predicted that since physician practices have followed this trend, dentistry will too.

I wish to use this podcast episode as an opportunity to dig little deeper and go down some rabbit holes to say, like Mark Twain said, “The news of my death has been greatly exaggerated!” I believe there is an exciting future for dentists and dentistry. Yes, the future will look different from the present, but a dentist with an entrepreneurial mindset directed at continuously creating value for the patient will always be welcome in the market.

Expenses or Profit, Which is will you choose? The answer should be easy!

Many times advisors concentrate on the Income Statement, emphasizing expenses as a way to reduce net income and taxes. These tactics reduce your income and hence taxes. We port forth the notion that maximizing profit is a noteworthy goal! Yes, one will pay taxes but have a greater income as a result.

The Section 179 deduction is a small business tax incentive that allows practices to immediately deduct up to the full purchase price of equipment – with limitations – without having to depreciate the full deduction over the useful life of the asset usually 5 to 7 year. The claim that it’s an automatic benefit to all customers is an inaccurate and misleading statement, without first knowing what the anticipated financial and tax impact would be to the doctor.

This is our introductory Trailer. Thank you for visiting and checking us out!