January 11

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How I Maintain 60% Net Profit Margins

By Eric

January 11, 2024


By Eric Horwitz, CEO of Net Profit King

The game of business is not one of revenue, but of net profit margins. It took me 13 years to learn this, and I’ve got some great tips ahead on how to dramatically increase your net profit.

Most people in the entrepreneurial world are showy about their revenue.

The classic example I give is: Would you rather have a business that does $10,000,000 in gross revenue and does $1,000,000 a year in profit or one that does $3,000,000 in revenue and $2,000,000 in profit?

The answer is quite obvious, you want the one where you’re making $2 million a year… not $1 million!

I would argue that the business that does $10 million annually is also a LOT more labor intensive and harder to manage because there are tons of more people, processes and departments.

How about we, as business owners, aim on taking home more money with LESS work and LESS overhead?

I run Net Profit King, a business consulting company that helps dentists dramatically raise their net profits. We do this by adding a remote offshore sales rep to increase sales and a remote offshore operations manager to reduce staff costs and improve operational efficiency. We cleanup your finances, profit and loss statement and are focused on one central guarantee: we will build you a system to add an extra $70k+ in net profit or work for you for free until that happens.

That’s how confident we are. How many other consultants for dentists focus on net profit and guarantee results?

I built my first business LIFT Enrichment to over $3 million in annual revenue with 60% net profit margin (which I check every month on my P & L) and it’s all thanks to several principles and mindsets. We take these tips and put them into your dental practice. Book a meeting with me and my team here to learn more.

Tip 1: Cleanup Your Books

Most entrepreneurs have no idea what their net profit is. I know, because I ask my friends in the Entrepreneurs’ Organization all the time.

Most have profit margin percentages ranging from 10%-40%

The average dental practice has a margin of 37% according to this post. A 1-person dental practice can have profit margins ranging from 30%-40%

But there are ways to improve that.

First, you have to make sure your Profit & Loss statement is cleaned up and easy to read. Here’s what I had to do with my remote offshore bookkeeper to clean up the last few years of financial data so it was readable.

We scheduled a zoom meeting and went through just the Income section and removed any “accounts” that we didn’t need. We simplified the Income portion of the P & L as much as possible.

Next we went to the Cost of Goods Sold section (which include Direct Labor and Direct Material Costs) and simplified that to reflect what I needed to know for my first business, LIFT Enrichment which teaches healthy cooking classes to students at hundreds of low-income schools. I simplified this section to just list the key elements that go into COGS including the Chef Teacher salary, payroll taxes, mileage, training and grocery reimbursements.

The next part was reorganizing the “Operational Expenses” which include Software, Professional Fees, Office Supplies, Marketing costs, Internal Team Costs, Insurance and much more. I guarantee that if you open your Quickbooks right now you’ll find a ton of accounts under “Charts of Accounts’ that just don’t serve your needs. I recommend going through each one, item by item, and telling your book keeper how to organize accounts, consolidate and put them into subfolders as needed. Simple example: I took Legal, CPA and IT consultants and just put them under “Professional Fees.” Within that category I had a few subcategories like Legal, Finance and IT. The goal is TO KEEP IT SIMPLE.

Now we’re down to “Net Profit” I suggest you add two Categories for Owner Salary and Owner Business Expenses. In the Owners Salary you’ll include your W2 salary. In the Owner Business Expense you’re going to add all of the purchases you make to your business that you can legally run under your business to reduce your tax burden, but aren’t VERY key costs to actually running your business. You use this strategy to reduce your net profit on paper and thus your taxes. I have a separate credit card that ques my book keeper to put business expenses here and not in “Operational Expenses.”

Simple example: A very key business purchase would be flying to Palm Springs to attend a business conference to improve your clientele. A non-key business purchase would be you flying to the Maldive for a week with your business partner to create social media content and discuss future business plans.

Working with my bookkeeper took several zoom sessions to organize my Quickbooks but once completed, we never had to do another deep dive. Each month I get the reports I need and can check them under an hour.

Your “Real Net Profit” are three things: Your Owner Salary + Owner Business Expenses + Net Profit on Paper.

Example: George runs Arizona Dental and it does $1,000,000 in annual revenue. He pays himself $100,000 in salary. He runs $50,000 through the business as Owner Business Expenses and has another $150,000 in net profit on paper. His total Real net Profit are $100k + $50k +$150k = $300,000 or about 30% of every dollar that comes in the door.

With a service like Net Profit King, working with us we could bump that up to $400,000.

Question: Could I delegate someone organizing my books?
A: No, you need to use your bookkeeper and GUIDE him or her, using the tips I provided above. It’s not a fun use of your time, but it’s important and once and will then help you focus on your net profit with…

Tip 2: Hire A Remote Offshore Sales Representative

Wow! I know if you’ve been reading my stuff you’re verrryyyyy surprised.

Here is my magnum opus on how to Hire A remote Sales Reps in South America

And here’s another post on how Hiring A Sales Rep Can Make You An Extra $50,000.

My point being that most businesses, especially dental practices, have no follow-up after a consultation. I’ve been to many dentists and at the office have received proposals on how much teeth or veneers would cost me to improve my smile. Once I left the office, NO one followed up with me.

If you worked with our consulting services, we’d take your list of clientele and develop a sales script and marketing campaign to politely reach out to people you’ve been in touch with and “check-in” to see if they still wanted better looking teeth (and more confidence!)

Imagine if you had 1,000 clients and with a good remote sales rep that costs you a mere $2,000 a month for full-time work, this sales rep booked 10% of your list to purchase a $1,000 service (like veneers). That would be an extra $100,000 (1,000 x 10% x $1,000) in revenue and with 33% net profit margins, an extra $33,000 in your pocket (aka net profit)

That is the POWER of hiring and training a good sales rep.

Currently, my main business LIFT Enrichment has a team of 7 doing sales. We’ve got 1 Sales director, 3 sales reps and 3 cold callers. They dial out over 900 outbound contacts a week and book a LOT of sales. Why not bring in a great follow-up service to your business?

Tip 3: Hire A Remote Operations Manager

You gotta balance more sales with more operations so your customers have a great experience.

At a dental practice this remote operations manager:
Has great English over the phone
Works American hours 9am-5pm PST
Costs, around $1,500-$2,000 per month
Confirms all appointments with all clients each day
Runs the main phone line when your in-person staff needs a break or are out to lunch
Reduces the cost of in-person administrative help
Organizes your P & L for you (with our help)
Prepares agendas for internal Operations Meetings each week (or month)
Tracks orders and inventory for your practice
Helps put up job postings for staff that you need (like hygienists or dental assistants)
Helps your hire and screen new staff.
Organizes scheduling for all your staff that are full and part-time
And more!

A typical operations manager in-person will cost you about $80k-$100k per year, while a remote operations manager costs $24k per year.

Currently I have 15 remote operations staff with LIFT Enrichment: 1 President, 1 Operations director, and over a dozen administrative, recruiting, onboarding, customer support, data management and account management staff.

This staff will SAVE you money …which equates to more net profit for you.

Quick math: If the average Operations manager costs $8k a month, and now you’re spending $2k…you’re saving $6k a month x 12 months a year = $72,000 in YOUR pocket as net profit.

Tip 4: Have Your Business Be Run by Written Down Systems (aka SOPs)

An SOP is a Standard Operating Procedure.

Our business consulting practice will help you create and organize your SOPs for ALL of your staff.

This helps your net profit because you know how things are run across all departments. The customer experience improves!

I write SOPs in a very stream-lined way and all my directors know how to build and teach the SOPs to their staff.
Most dentists don’t have key SOPs like

How to answer the phone line
Opening the office for the day and also closing it for the evening
Organizing inventory
Placing orders for new supplies/equipment
Updating the P & L each month
Run a weekly operations meeting for all staff
Run a Daily huddle for all staff

My team and I will help bring order to your workplace, improve efficiency and your bottom line

Tip 5: No Office

I know this last tip doesn’t pertain to dentists because they definitely need an office to service their clients. But this one-tip has helped my net profit significantly.

However, a dentist could strategically use this principle to build in some non-office work days. You could work from home 1-2x a week, or from your favorite cafe, or even travel the world and remotely check-in with your key office staff.

(Currently I’m writing this post at a very fancy hotel called The Global Ambassador that’s brand new in Phoenix, Arizona. I just had a delicious lunch and I can feel the cappuccino run through my veins as I write these words. It’s my treat each week.)

By working remotely, you can think ON your business and not IN your business. You can work on your SOPs. You can dive into your P & L. You can have some peace and quiet to focus.

I think every entrepreneur needs this “CEO time” baked into their schedule. I do two full days a week (typically Wednesday and Fridays) but you can start small and just do one day or even a 4-hour block each week.

Just get away and think. Work without an office. Imagine your dream life. Focus on projects that improve your revenue and your net profit.

And if you want the help of the Net Profit King to BOOST your net profit (and double your investment in us!) then book a meeting with my team here to get started

Eric Horwitz

Eric Horwitz

CEO And Founder

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