Q: How do I know if staff costs are well managed?
A: Staff costs should be 28-30% of practice collections (or lower if you can find it!) This includes staff salaries, payroll taxes and any employee benefits.
Staff costs are the largest expense in most dental practices. Why?
You can find ways to pay as little as possible in most areas of business, however, employees often don’t like it when they feel like you’re trying to get them to do work for you at a discounted rate.
As a business owner, you can’t avoid the inevitable raises your employees will ask for and likely deserve.
Many offices you may be looking at are those with staff members that have been there almost as long as the seller. When this is the case, their salaries are likely to be higher than the average office manager, hygienist, etc.
Sometimes those staff members may be looking to retire with the seller. This may be a solution to the high staff costs.
Geography is another factor to take into account. Hygienists in Washington, DC tend to make more than those in Lexington, KY.
If you’re looking at an office that is notably lower than this range, perfect; you don’t have to touch a thing! Plus, this means that you can step into the office on Day 1 and not be immediately stressed about paying your staff, student and practice loans, etc.
Make sure you focus hard on the staff costs when you’re looking at a practice; this is the most difficult category to improve.
Although you shouldn’t expect to turn a mismanaged practice around, think hard about what you can change quickly (Supplies & Labs and Advertising), what is hard to change (General Wages/Staff Expenses) and what is permanent (Facility Costs).