Dentistry Uncensored with Howard Farran
Dentistry Uncensored with Howard Farran
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1217 Business overhead and accounting by Judson Crawford CPA, IAR, Cain, Watters & Associates : Dentistry Uncensored with Howard Farran

1217 Business overhead and accounting by Judson Crawford CPA, IAR, Cain, Watters & Associates : Dentistry Uncensored with Howard Farran

7/1/2019 8:13:00 PM   |   Comments: 0   |   Views: 281

Judson graduated from Texas Tech University in 2002 with a Master of Science in accountancy. He began his career as a staff accountant at Ernst and Young in Dallas. After several years in corporate tax consulting, he became a planner for Cain Watters and Associates in October of 2004. Judson has excelled at making personal connections with his clients that help him ensure the best financial future for them, their families and the generations to come.


VIDEO - DUwHF #1217 - Judson Crawford


 

AUDIO - DUwHF #1217 - Judson Crawford

In 2014 Judson became a partner at CWA. In addition to his role as a CPA, he is the executive board member responsible for CWA’s Marketing and Communications department. Judson is active in both professional and collegiate recruitment for the firm, and serves as a mentor to new planners and associate planners. Judson is a Certified Public Accountant and an Investment Advisor Representative.



Howard: it's just a huge honor for me today to be podcast interviewing Judson Crawford: CPA IAR the CPAs for a certified public accountant that  are is investment advisor representative he's a partner at cane waters and associate he graduated from Texas Tech University in 2002 with a Masters of Science and accountancy he began his career as a staff accountant at earnest and young in Dallas after several years in corporate tax consulting he became a planner for cane waters and associates in 2004 Judson has excelled at making personal connections with his clients that helped him ensure the best financial future for them their families and their generations to come in 2014 Judson became a partner at cane waters associates in addition to his role as a CPA he is executive board member responsible for CW's marketing and communications department Judson is active in both professional and collegiate recruitment for the firm and serves as a mentor to new planners and associate planners Judson is a CPA and an investment advisor representative we've had another gentleman from the show from cane waters he was on episode six ninety one get the numbers right with Charles Loretto director of new client services that was an amazing show so basically cane waters was founded in 1984 it's a CPA form providing comprehensive accounting and financial planning services to more than 1,900 clients nationwide their specialized services include complete personal and business financial planning comprehensive tax services personal and business budgeting pension planning strategies complication accounting services investment advisory services dental practice production and fee analysis new doctor program acquisition of other office and buildings new office and the reason I called him to be on the show and he did don't call me and this is not an advertisement for Kayne waters that you know to be a leader in dentistry you don't you don't have to lead my homies to tell them something new about implants or aesthetics or both of that stuff I mean they're like a chef they went to cooking school they want to cook but they don't know their numbers and I just never ever find dentists who really know their numbers and what I loved the most about keen waters when I first met on the founder Darryl W Kane what I loved about him the most is back in the day when I met him is like 80 87 88 you probably weren't even born yet were you even born in 87 yeah I was I was I was the ripe age of eight eight years old when you were eight years old Darryl was so convinced that finances was such a huge problem within the marriage and the family that he wouldn't even take on a client unless when they met you for your year in numbers you had to bring your spouse and you had to spend the whole day and if they didn't think um your spouse was engaged they didn't want you and he just said just a great guy so uh what are you gonna tell us today about knowing their numbers I mean you're an accountant you don't do root canals and my dentist they don't do numbers so how does that work out 

Judson Crawford: well I think there's a there's a few things that I'd start off with you know not only do I think do I agree with you that most don't know their numbers but most even pay a bookkeeper or a CPA or somebody in their office to build these financial statements that can show them a world of knowledge about their business and they don't use them they don't look at them they're in a non usable format all these different things and so you know it's senseless that you know you're paying people to compile this for you have staff members that can help you with it and so you know there's a couple different things that we really talk to our clients about a you know looking at monthly how to assess your business and doing it in the way that's not confusing you know the big rocks you don't have to you don't have to know every detail of your business every month but there are some really important things that that we believe that it Dentist should be looking at every month so you ever just jump into some thoughts heck yeah okay well I'd say probably the most underutilized report that every dentist has in some former fashion is the profit loss report okay in a profit and loss report it's an accounting report most people are probably using QuickBooks to do it but they have somebody that's put the numbers in or they're putting the numbers in and it's really more of a something that they send their CPA at the end of the year to do taxes but it's but it's a management tool that people could use extremely effectively to manage their business you know one of the things I remember one specific client that is the perfect example of this probably 10-12 years ago he came to see me and I said we'll send me your books and he sent me a profit loss report out of QuickBooks it was like eight pages no organization all kinds of crazy detail and it just wasn't usable whatsoever and he didn't know the cost in his business he didn't know his overhead he didn't know anything and then how could he right I mean he couldn't because he didn't have a anything that was useful to him and so bottom line I finally convinced him to hire our accounting department it's not really our accounting department that's the magic mojo here but what our accounting department does is  they make financial statements that are concise that makes sense and that frankly are put on one page because if  they're longer than that then I'm not gonna get any of your followers or my clients to consistently look at them and use them if they're you know too in-depth you want to be able to have something summarized and you want to be able to have something that you can use how would we do a we do a an annual report called how does your practice compare report where we take our clients in in different specialties and different sizes and we boil them down and and basically our people are able to come where their profitability is where their expenses are things like that to our average clients I point that out because the way that I would recommend to your listeners develop their profit and loss to be usable is the same layout we have here where it's simple we've got profit your collections it's easy then we've got your direct expenses which are basically salaries lab and dental supplies for it for a general dentist those should be somewhere in the forty percent range then we have the fixed expenses fixed expenses are just expenses that don't fluctuate based on how much you produce like rent and those should be ideally around twenty percent and then all other doctor costs are below that and that gets you to a place where you can actually talk about hey what's my overhead you know as a general dentist am i making forty percent plus of the revenue in order for me to take home fund my profit sharing all of those things and so there's a lot of other things we can talk about  the profit and loss but you know generally that's kind of a great starting point is for your listeners if they don't have something that they use that's usable change it

Howard:  I've always been on an axe to grind because you know I grew up I learned this as my dad had sonic drive-ins you had nine sonic drive-ins and back then the cash register was owned by NCR national cash register later got swallowed up by IBM but it had more integrated accounting into hamburgers fries and onion rings than anything and then Here I am you know 56 I've been practicing 32 years none of these dental practice management software systems denture it's eagle soft open dental none of them interface with accounting software which i think is just absolutely insane you mentioned a quick book or quicken would accounting software do you recommend well you know it doesn't really it doesn't matter the big QuickBooks is by far the the leader in the industry they're the largest you know we most of our clients have switched to a accounting software called zero its XE ro you know but I mean really anything that that anything that's usable for your clients QuickBooks is probably the one that has the most learning modules it's intuitive they have the online QuickBooks that's very easy but whatever's going to work for your clients and or the bookkeeper they're using to clean up their books it doesn't really matter because they can all be reformatted to to look like you want it to look like to be the way you want it to be so that you can run your business so what I agree with you on the software thing I mean and you know the other tool and we can jump to this later but the other tool that I recommend all my clients keep monthly as a practice monitor we use one different consultants use one and the reason the practice monitor is so essential is as you know if you get it add in tricks and you want to pull five different stats for the month you have to go to five different spots to do that it's not user friendly and so a practice monitor simply gives you a where you can highlight the top 15 stats in your office you know one of the individual individuals working at the front desk and easily fill it out for you so that you know your doctors can just look at it you know assess where they where they've been so far this year and again make decisions based on it so you just said a lot of your clients or you said most of your clients switch to 0xe ro comm accounting if they use our internal accounting department

Judson Crawford:  I would say that most of my clients that aren't using our accounting department to do their books use QuickBooks we just use Xero as an accounting department here it's very similar it gives you all the capabilities of QuickBooks it's just a little bit easier for our accounting department to be on one software and there are some advantages that we found with Matic for with that exact software essentially okay first of all I don't know  you know that they're probably you know twelve fourteen percent of the market none of them run on quick and quickbooks pro zero

Howard:  most of all them i talked to or on a lot of Microsoft bought Great Plains accounting so they're microsoftpls microsoftpls owners that may be involved in a DSO or your individual owners is the

Judson Crawford:  DSOs because their goal typically is either growth getting bought out taking it public whatever they want to do they are typically an accrual-based accounting based on GAAP okay now that is not something that we need to go into in this but bottom line is is that they report differently than your individual doctors because your individual doctors should all be cash basis taxpayers money and money out you know much easier for an individual on QuickBooks to use your   individual offices should not be on accrual but it's a whole different world for the DSO guys because they're positioning themselves to be looked at by other investors which require a whole different set of accounting rules basically 

Howard: what do you think of the DSOs right now none of them in the United States are public I mean you know snapchat can go public all these uber uber went public and it loses a billion dollars a year I've lived through this rodeo from 94 to 2004 all these Internet companies are saying oh look at our growth and click so it's like dude it's called profit and they lose a trillion dollars a year so the the value is they have no value you know mr. wonderful on tank would laugh at that investment prospect but  you can take a billion dollar-a-year lost company like uber public and the lift will be next and and by the way on that rodeo I saw this with hotels there you know there's no protective mode against a software app I mean now there's a hundred of them and then uber comes out there's no protective mode against that and when the first competitor came out lift within a year it took a quarter of ubers business and I guarantee you in ten years from now there'll be a hundred right sharing apps and not only make money but how come billion dollar loser uber go public but big old BSO's like Heartland and Aspen and all these big guys at Pacific dunno how come they can't go public you're an accountant is it because they're not profitable

Judson Crawford:  no I my guess is is they're enjoying their profits quite a bit going back to the technology thing you know technology is as you well know and you're referencing to you know in the over and the lyft IPOs are perfect examples of this but you know go back to go back to 2007 2008 and at that time the sp500 was made up 40% of finance and banking right so banking and finance had seen this big run up and then 2008 happened big recession financials went back down as a percentage of the SMP okay well now after the last couple of years 40% of the SMP is technology so we've seen over the past few years that companies like you know Amazon Netflix Google you know and then all these companies that the technology has just become this big and I don't want to call it a bubble but it's a it's it's expanded tremendously and so companies like lyft and uber are just trying to take advantage of that run while they can I think that I think that when you look at the the the DSO movement in dentistry and how much it has it has grown over the past five years I think it's very clearly because they're you know we're in this huge the longest bull market that we've had since 2008 money has been very loose in the economy and frankly when you look at dentistry and specialty practices the profits are just good and so people people are looking at it and they're going you know what well if Heartland can do it you know why not us and then and then it catches some fire because doctors say well you know maybe I can maybe I can do what I saw this technology guy do maybe I can be in with some people and get a higher multiple for all this kind of stuff so I think that you know just like with everything else that is kind of out there right now we got a we got a record-breaking stock market we've got high real estate we've got all this kind of stuff the economy's expanded to a point where you know everything's expensive and and some people are capitalizing it on it in dentistry I do think they're profitable though and I don't think that I don't think they probably want to give away their profits they're enjoying you know what they have 

Howard: well they're on there you know the one thing the DSOs do is they get an a on banking insurance financing HR market that everything non dental they're beating my homies at and my homey and you know their Achilles tendon which is nobody's surprise the fact that people who go to years college become a dentist they usually don't want to be an associate you don't have enough ambition to go to college II years to be my servant for the rest of your life so staff turnover is tough this is with all Millennials actually I mean Facebook Google Netflix they all have massive employee turnover because you know they the type of people it attracts aren't usually good employees but let's let's go right back to productions collections overhead as key performance I want to say before he starts talking is that I know you guys and you go to your study club and the guy next year yeah I'm over it's only 50% yeah he owns his land and building and he paid it off he doesn't take the land and building and say it has an asset and pay himself rent he just now has no quote no overhead yet he's got a lot of money tied up in a land building and they say oh yeah my labor is 20% well is that does that FICA matchings that include health insurance that include the total cost they employ so there's no chart of the counts in dentistry if you have a chart of accounts I wish you would post it on dental town we even have a thread about charge counts because these guys are talking overhead and they're all comparing apples to oranges so knowing that this dentist I'm and even when you talk to consultants they say well yeah he said he didn't have a problem he said his labor is only 20% and is over it's only 35% then they go in there and find out his Labor's 29% and so so how do you talk production collection overhead to a bunch of dentists who could tell you four different ways to bone graft around an implant but don't know with FICA matching is included in there and their staff overhead so so good not good lots of this explanation 

Judson Crawford: it's a great you you make a great point okay and and you know to give you an idea again I'm gonna I'm gonna go back because I encourage your readers to download or how does your practice compare report and maybe we can even post a graphic of it for you but basically the layout that you'll see is kind of what I'm going to talk about here but the comparing apples to oranges an overhead is absolutely a huge problem so to give you a for instance when we talk staff salaries and I say that hey our average our average one doctor general dental practice average is about 22% in staff salaries that is just gross salaries doesn't include payroll taxes doesn't include 401k doesn't include health insurance and the reason that that is the most appropriate way to compare is because everybody pays gross salaries right but not everybody has a 401 K not everybody pays health insurance not everybody has all these different things so when we're comparing to industry standards we have to boil it down to the to the symbolist level which is just your gross salaries it's also a reason why even if our clients have messy books and don't have it organized like like we organized it every year when they come in we put it into our own module because it's it's imperative that they have consistency and comparability to prior years another thing I'll note here when looking at overhead for your clients using percentage of collections is key because again that's what everybody talks about when you go to your study clubs oh yeah overheads only fifty percent well fifty percent of what well 50 percent of your out of your collections that's that's the bar we're setting is what percentage of collections they are you know your rent example is a good one some people pay way too much and rent to themselves some people pay way too little and it can skew things and so you know if you're comparing if you want to compare your overhead and you do own your building you need to think about rent as hey what would my rent be if I wasn't paying myself what if I was paying an actual landlord and not me that if you have tax advantages that's fine pay yourself a million dollars a month but when looking at your overhead you need to use you know real numbers as if you were uh if you were a tenant um when we look at when we look at production in collections okay number one collections that's the money that comes in it's the easiest thing that's what you guys are really looking at caring about you know what we like to do for our doctors just say okay you know where's your productivity compared to you know our average provider you know in general dentistry are our average general dental practice including hygiene is somewhere around 1.2 in in production and collections so that would be net production and collections and it's pretty scalable when we look at when we look at two doctor practices it's like two point three five so pretty much double that when we look at three doctor practices it's three point six so consistently we see that in our practices you know general dentists are on average doing about 1.2 per doctor including hygiene you know you go into other specialties it can be a lot different that's just kind of what we see on that one other thing I'll say about collections which i think is huge and and this goes specifically back to your comment earlier that that our dental softwares don't integrate with financial softwares when you're using QuickBooks or any other bookkeeping software what the bank is what was being reported on your profit and loss is the money that actually hits the bank when you go and you look in dendrix or another dental software what's being reported are the credit card payments the cash and everything else that you're receiving at your front desk so you need to periodically compare what's hitting the bank account and what dendrix is saying is coming in the office because number one the confusing part is they'll never match perfectly because of timing of deposits but if you start to see that there is a wider and wider disparity between what's being reported indent ryx and what's actually hitting the bank account you could have a problem and so you need to compare those collections from one place to the other does that make sense and the problem would be embezzlement you know a lot of times it's a lot of times it ends up being a software issue or a front desk issue but yes that's the big fear and the reason that you really want to keep your eye on that is embezzlement cash being the most the easiest thing to embezzle so how 

Howard: so how many clients do you have nationwide right now would you say two thousand and seventy two thousand seventy and how many of those when they came to you did not know they were being embezzled and then found out after joining you that they were being a puzzled from you know the numbers quite large if you if you look and 

Judson Crawford: you've probably run into this this firm before there's a company called Prospera dent on and they are one of the leaders great company and the leaders in in forensic accounting that go in and help people most of the time people don't call them until they know there's a problem but they would say that you know upwards of 30 to 50 percent of dentists maybe even more at some point have had some sort of of embezzle you know we don't catch it not that often I'm John McCain David Harris with prosperity you got it yeah David Harris he was on the show he was show to 68 predict embezzlement David Harris but but you say most people too aren't calling David Harris with until they really think I have a problem until they have a problem and most people don't most people don't think they have a problem until it until it's uncovered and it's too late most of the time and I think that that honestly the vast majority again we're talking about knowing your numbers the vast majority of embezzlement cases that we see are simply because most of the time could simply be caught if you had appropriate measures in place in in the practice you know to to catch these whether it be you know having multiple people verify the cash that's coming in you know because at least then it would take collusion between multiple employees you know simple things check signing authority you know you should always be the only one to sign checks for bills even if you really trust your office manager because 99.9 percent of the times when somebody is embezzling from you it's somebody you trust more than anybody else in the office and give more power to you know so I most of the time it's it frankly it's the dentist's fault that it's happening under their nose but it it happens more often than you'd think for me I'd say five to ten percent though of our clients you know catch it at some point I want to 

Howard: I want to tell you another thing that I caught the young kids this flew over their head base says you know you said you have 2170 clients and then before that you said your average client does 1.2 million per year ding-ding-ding-ding-ding you know the the stats are clear the average dental office does about seven hundred and eighty thousand dollars a year but what are his clients people who get consultants so when you talk to any consultant they think all the dentists do 1.2 1.5 and the bottom line is you do some 50 because the guide you in seventh he's buying a CAD CAM and a CBC teen a laser anything so he buys all these Star Wars gadgets you know it'll come and it's just it has nothing to do with reality in fact I would even say that an office is doing 1.2 million it doesn't even mean there are a higher quality data center dentists doin 780 they just know their numbers and that's what I'm trying to get you do I don't have to be a leader to tell you to go buy a CB CT or a laser hell you were born one a laser but you know you just you got to learn your darn numbers is there any accounting software say there are associate right now they want to start their own practice you work with dendrix Eagle soft open dental do you like any of those more than the others are already have to stay ignacio's is law 

Judson Crawford: as far as the dental software goes I'm pretty I don't really care I don't even get into the dental software's very much and like I said earlier you got these the problem with the dental softwares is is that it's the data is so fragmented from everything I can tell it's like you know getting 10 pieces of data is going 10 different places I do like if I was a if I was a young doctor start well hell if I was any doctor going you know doing this there are some really cool tools out there that are kind of like software overlay programs that extract data and give you really useful data so they'll going to dendrix they'll give you like really cool stuff there's one that we've been working with a lot called dental intelligence and again it kind of creates this dashboard and tells you a lot of the useful data from your software but it can also give you great percentages that you don't have to calculate yourself like you know what percentage of my hygiene is getting appointed out of you know out of their visits you know um you know they even have like this cool Monday morning huddle deal where it kind of shows you everybody coming in you know whether those people coming in have family that haven't been in a long time and it's just it's their software that are making your dental software more usable than the actual software companies

Howard:  so you call that middleware yeah that would be a yeah that would basically be the type of yes I think that's a good approach for and and is difficult intelligence the one you recommend I mean is that is that your final answer you like that one yes that's the one that that's the one that we've been recommending recently just because they're you know they're a good company we have a lot of clients that use them there are others out there that in in 

Judson Crawford: from my standpoint if you're a specialist you know specifically ortho ortho really fits into a different model there's  a different software out there for ortho typically people are using gauge for that but there's other ones that you can absolutely use it's it's all about again it's all about usability like finding something that enables you to to look at your numbers and actually use them to make business decisions that's the that's the bottom line 

Howard: and you also recommend prosperity' David Harris 

Judson Crawford: absolutely if you if you have any suspicion that something's going on or if you before something goes on want to have somebody that comes in and gives you the processes to stop it before it starts they're the firm to come and they're they're out of candidate right that's right

Howard:  today is July 1st happy Canada Day and my gosh I'm it is I and what's really neat about happy Canada Day I gotta get this I don't want to get the date wrong on this but it's July 1st it's happy Canada today and the Ontario did you know the birth of Canada and the birth of the Ontario General Association were just one day apart so tomorrow really is the birthday of the Ontario Dental Association yeah when people come in why are people wanting to be your client is it because they have high overhead it's because they don't understand it why did 2,000 dentists want your services that they I mean I'm sure they're in Toledo Ohio they got a CPA down the street goes the same church with them why are they jumping on Southwest Airlines and flying to Dallas and seeing you 

Judson Crawford: it's a great question I would say initially most clients engage us because of you know a local CPA surprise them with the tax bill or their cash flow is just you know too  tight and they don't know why they feel like they're poor when they should be making more money or you know I'm about to build this new dental building and I don't know if I should or if I can afford it or some there's usually something that kind of is the tipping point many times it's a pain point that brings them to actually call us or actually engage us what I think though that the reason that we grow and keep clients as clients for many many years is number one are our knowledge of Dentistry you know there's a lot of there's a lot of CPAs or financial firms out there that call themselves dental professionals there's even though there's even a dental CPA designation that you can pay for and you it's not a real designation so you can go out and search dental CPA and you'll find somebody locally that probably has two dental clients and it's an advertising paid mechanism but you know for 35 years we've worked almost exclusively in the dental field our advisors really know dentistry we know how to look we're not practice consultants we're not gonna come in and tell your front desk how to answer the phone but we can look at your numbers and tell you where problems are and many times give you the right steps in order to fix it so I think dental knowledge is number one and number two we're a CPA firm and  most of us have heavy tax background so a huge part of what we do for our clients is making them tax efficient you know and finding the best ways in the in the dental industry for them to pay the  least amount of taxes and then the last thing I'll say and this kind of goes back to what you said about Darrell Dina back when he required his clients to come in for a full day with their spouse you know what it still looks the same in a lot of respects but we have deep relationships with our clients and what we do is is all missing financial planning so really anything related to our clients lives financially we want to help with and want to get into I think that the  term financial planner has kind of been bastardized over the years because of you know you can find a financial planner or your Kroger parking lot or your target parking lot you know there's so many little financial planners you know a lot of times when it when people say well what do you really do I say you know I said like really if I was to explain what I do I come alongside my clients that are business owners and I become their CFO of all of their financial life you know we help manage everything and the goal is is to make sure that every bar part of your financial life is moving you in the direction towards the goals that you have in so many times people's financial lives are fragmented by many different advisers and they're not working in a concert together and so we can kind of bring that all together to make sure that it's that it's moving in the right direction 

Howard: you know a problem I see and I don't want to doggone Millennials because I love them to death and the the the old guys the baby boomers are on the desktop dental town and the baby boomers all now but you know you just have to tell them a million times the easiest dollar earned is a dollar saved the second easiest dollar earned is a dollar in taxes saved the hardest dollar you will ever earn is from doing more dentistry so how do you convince young kids a dollar save is more than a dollar earned when they're coming out of school with two hundred eighty-five thousand dollars in student loans and in my own backyard this has happened for a decade where the guy graduates and he's sighted while he was in dental school to get married have a kid his dad's a dentist has a home and a practice and I tell him you move back in you live in your dad's basement until you pay oh no he'll know he goes out by his a 350 thousand dollar house and then he buys his wife he's home with a kid a Range Rover and I'm here you just you just cringing cringing cringing how do you get these guys to save money and to save on taxes 

Judson Crawford: well one thing you know I'll come to the to the partial defense of Millennials even though we don't like to give him a hard time you know the the baby boomer generation was just as bad with their cars and their money and you know we for years have seen the same you know generations before Millennials they may not have had the same amount of student loan debt but they still like the same toys over saving so you know that the problem may look differently but I think it's the same thing so you guys would say that the Millennials that the baby boomer Dennis bought just as much baloney toys as the miles that it's that that that you're seeing the same I think so it may look differently on you know a lot of times you know yeah and look there's different problems as people age and spending changes and so you know you look you look back and you say and you know I joked I went and spoke last Monday night a week ago to a bunch of residence at UT San Antonio and was kind of joking with them about the fact that you know hey you know when you you know when you get your degree make your plan find your practice know what you're gonna make in that practice before you go to the BMW dealership and buy your car I mean but I was joking about it but there is this tendency that there's either the car or the house thing I graduated I'm about to be a dentist and make money I'm gonna go do some huge purchase like it's like this you know feeling and we've seen that for many years I think the problem with the problem one of the problems with the baby boomer generation are not baby boomer sorry the millennial generation and those people that are coming out of dental school right now is just like you touched on it's the huge amounts of debt debt creates fear with a lot of these individuals I mean what I think a lot of times that causes them to do is to delay ownership because they're afraid of taking on more debt and and what I tell people is is look whether you have 250 400 or 600 thousand dollars worth of student loan debt we know you have to service that but if you find a practice to purchase there are tons of banks that still want to lend you more money and so if you find a practice with good cash flow you may be able to service that debt and start retirement and do a lot of other things because if you simply go and join a corporate dental practice and get paid 28% of your collections yeah you may be able to service your debt and pay that BMW note but there's not gonna be much left over after that so you know I think that and look there are still a lot of Millennials that are getting out there hard charging towards ownership and they know that's what they want to do but don't let the fear of debt interfere with what you're you know 35 your career is going to be because the rewards of ownership are so great that the longer you delay that the longer you're going to put off that dollar save the bottom line

Howard:  so that's another interesting thing I've seen in Millennials and again I'm not just sitting here trying to hurt Millennials but I graduated May 11 I had my office open September 21 I got out I drove straight from Kansas City of Phoenix you know the whole nine yards I see these dentists you know they're five years out of school and they've had seven different associate jobs and I always tell the seniors in dental school you know if going to be an associate is such a great idea then you should be able to go out for years contact everyone who graduated four years ago and they're all happy as a pumpkin pie working for someone else and I just don't see that do you do you think that and then the DSOs are telling everybody that oh my god you know Howard's like the old pharmacist that had his own practice but you're all gonna work for Walgreens and CVS and myzel join now and so do you do you see a big difference in income between being a dentist associate and owning my own practice usually 

Judson Crawford: so let's think about it let's think ya know let's think again I'll just kind of give you a big picture number let's let's take let's take a million-dollar practice okay that is 30% hygiene 70% doctor production okay so that means the doctors doing $700,000 if you're an associate producing 700,000 you're gonna make somewhere around 28 to 32 percent of that so let's say 30 out in the middle so that means that you're gonna make two hundred and ten thousand dollars as an associate great okay that's not a bad wage but if you owned that practice okay and you had an appropriate overhead and an hour an appropriate overhead r1 r1 dr. general dental practices run about a fifty six percent overhead so let's calculate that if you have a million dollar practice and you have a fifty six percent overhead your net e forty four percent so you're making four hundred and forty thousand so toots that is an associate 440 as a owner doctor you've more than doubled your income because not only are you making the the difference in you know the thirty percent you're getting paid and the forty four percent you're Neddie but now you're you're making money on your hygiene pool as well which no associates make money on hygiene 

Howard: right in my opinion if you decide to use other people's money which you can complain about having a mortgage on your house and student loan payments but there's two hundred twenty countries and you only have access to other people's money's in about twenty of them the reason the developing world is poor is because they don't get an A in banking and they don't get capital to their people so there's worse things than having access to other people's money but I think that once you get a third of a million dollars in debt to other people's money working at McDonald's is no longer an option and working here as an associate is a twenty five year payback period and I think once you get a third of a million in debt you have to go all the way to a million and buy a dental office for $750,000 and own your own deal do you think that that's true that if you get a if you go a third of a million dollars down the road of OPM then you got to go all the way to the end and get a million dollars of OPM in order to pay it back in a timely fashion of five six seven years 

Judson Crawford: well it just you know kind of it depends what the individual wants I mean look if you've got four hundred and debt and you're paying a couple thousand three thousand dollars a month over thirty years to pay back pay that back and you want to be an associate two hundred ten thousand dollars you can probably make it work but your lifestyle may not be exactly what you wanted to be but you can you're not gonna go bankrupt but um choosing the  riskier path has it's clear benefits of you know again being able to potentially live off of a higher amount save more on you know and  get to the point where someday you can live off the money you say let's I blew away these residents last week when I when I told them I said okay look let's say that you want to retire in thirty years and you want to live off fifteen thousand dollars a month in today's dollars how much do you think you'll need in thirty years to live for the next thirty five years and people were saying - I had one girl that said five but the number with inflation is eight point five million dollars so in thirty years for you for you young people if you want to live for another thirty five off of fifteen thousand a month is eight point five million and the only way you're gonna get there is by saving seventy thousand dollars a year starting now so do you think that as an associate making two hundred thousand dollars you can service four hundred thousand dollars in debt live you know send your kids to school and save seventy thousand dollars a year that's not easy and so to answer your question in a reverse way the the associate long term associate path just has financial consequences that the young people don't often think about because they're so focused on it just need to pay this debt I just need to pay this debt but they're not looking they're not picking out 30 years and saying what's it gonna look like then 

Howard: so when I asked you about the dental chart of accounts you said go to your website waters calm cane CAI n which is a bad name for dentistry I mean sugar cane is the root of all all dental decay and he had to name himself cane after sugar cane waters how does your dental practice compare download now which I did and you also got a neat one for orthodontist an pediatric dentist so when they go to that chart of account and it's a 28-page PDF but by the way I wish you would post that on dental town because that would be a great place to do that but what do you make that happen what do you make that happen what  do you see on that chart of account what are you seeing and you're observing you know 2,070 dental offices um what would trends are you seeing and where do you see the dental industry going from the day you entered it between then and now and where do you think it's going what do you think it's gonna be in ten years well I think my personal belief is 

Judson Crawford: I think there's a lot of uh you know talking to millennial terms FOMO you know a FOMO is no fear of missing out okay and I think that I think that in the dental industry sometimes and probably people in general we get a lot of FOMO a lot of fear of missing out all over this DSO thing you know there's a lot of talk about it people are afraid of like missing some train I think that while bee activity is legitimate I don't think that we're in ten years down the line dentistry is going to be Walgreens and I think that and personally I believe that the privatized business owners should be standing up for that right because it's paid them very well to do that and and I think that it's all a money full-blow thing and  we're bound to be going through a recession at some point in the coming years which should slow money and things like that so number one I don't think that people need to fear this missing out opportunity of DSOs number two I think that people are getting smarter in order to compete with the DSOs number one most of your clients that our individual practices they offer a different service than many DSOs as far as individual care and things like that and they pride themselves on that but you know we started a company a handful of years ago called elite dental alliance that is a buying group specifically to bring our clients and other people together to negotiate better deals because we also know that one of the problems with an individual own practice compared to do it to a DSO is as DSOs walk in the door at the bottom price and your clients negotiate with their supply reps to get you know just a slight discount and so you know we're helping our clients do that what was your buying club called elite dental Alliance Elite Dental Alliance is that the website - yep you got it Elite Dental Alliance and  you bought that and that's a that's a purchasing supply purchasing Alliance supplies marketing payroll I mean you name it it's got vendors on there the we started this a handful of years ago basically again just looking at our clients and saying you know it's not really fair that are individually owned practices even if they're doing 1/2 million dollars they don't get the same pricing as DSOs does and so we decided we're going to band our clients together and try to do it for them and  try to save clients money you know the name of the game I think going forward is for people to continue to do their dentistry and do it in a profitable manner you can dentistry can be one of the most financially rewarding industries out there if you mind your overhead well like you can produce two million dollars and if you have a terrible overhead you're gonna make four hundred thousand where you could be making eight hundred you know and we see that all the time so many people focus on hey I'm gonna do two million dollars this year I'm gonna do 1.5 million dollars this year but all that is for you nothing if your overhead is out of control and so I think that you know when we look at things like these buying clubs or you know the development of milling units in the practice and being able to save a lot on lot on  lab you know being able to do this industry more efficiently is the way that your clients are going to be able to continue to make more and more money even if they're not doing one point two even if they're doing eight they're 900 a million dollars you can still make a really good amount of money if your overhead is appropriate

Howard:  ha I just went to dental down and sure enough there is a thread on elite dental alliance how is that working how long have you had that how's it working out for you all that stuff what's good I mean you know we've had it for I believe three or four years now we surpassed the thousand member mark um it is not expensive you know it's basically it's basically a thousand dollars for a year to be a member if you don't save the money you're not gonna you're not going to join but the bottom line is is that the more the more people we've had as members the more aggressive we can get with our negotiations and so we're able to start dealing directly with distributors working on pricing they're you know there's kind of there's kind of one of everything on the site vendors by the way you don't have even changed your ordering processes you just get the discount that they've negotiated directly on to your account and there's some real bit 

Howard: then the CDA started there on one to the California and that's just one of the 50 states and do you think Amazon is gonna be a disruptor in the space they've been at the Greater New York meeting with the booth the last three years in a row but I'm yeah I understand they look like two men in black I mean they're just having secret conversations with everybody but I think so so do you think Amazon's can disrupt dental supplies 

Judson Crawford: here's where I don't really I mean I don't I don't see that necessarily coming here's what I would say about supplies and supply is an area where Dennis spent over spent all the time okay if you have a if you have a shark of an assistant or front desk person that's doing your supply ordering and they're going to you know every different supply company Darby and shine and in there and they're pitting them against each other to buy everything they can save a ton but the reality is  most of the time because of ease people just pick the supply rep that they like the most or brings them the most lunches and then they just order everything through them and so what elite dental alliance to other buying groups here's the benefit I think that that they can provide is they go do the negotiating and go do the searching for you so that you don't have to go to ten different suppliers in order to get your supplies and save the money on because most of the time frankly if people are overpaying for supplies they're just paying one person gave him a good deal at one point and over time the pricing has just gone up so does that make sense

Howard:  yeah it does um I am also just to go back to one thing you said um you said that you don't do dental office consulting do you if someone's listening to you right now and said I need both I need accounting and consulting is there a dental office consultants that you work with or is that channel conflict to recommend someone for you 

Judson Crawford: what I would say is there are so many consultants out there that do different base you know we'd be the recommendation based on on the need like I'll give you an example like we use a hygiene consultant that is fantastic at helping our clients you know grow and shore up their hygiene Department but obviously we're just gonna use them if we feel like a client needs that I think that you know 15 years ago most consultants had a program where you know you sign up you pay me $50,000 and I'm gonna take you through my set of Lists you know it's kind of like the all-encompassing consulting where to go through all the modules and I think that the trend that we're seeing that I think is a better product anyways is hey I'm not gonna make you go through every module of mine I'm gonna diagnose the problem in your practice I'm gonna address that specifically and if you want to move on with me you know in consulting and do other types of things and I can and I can help you with that but don't don't tell somebody that's having problems with hygiene recall that hey we're gonna start with you know something else well no let's let's address the problem so yeah we use a handful of consultants but you know the numbers I think of dental consultants to me seem like they're dwindling I don't think you know I it used to be that seemed like there's more players in the game and now that there's just a handful do you think it's because a lot of times when people need a dental office consultant they throw in the towel and sell it sell it to a DSO no I think most of the time when people need a dental consultant they either think they're too smart to hire one or can't afford it and and they just don't do it and they end up struggling in the same place that they've been forever look dental consultants and I've told clients this time and time again I don't think that dental consultants nobody on your nobody listen to this is gonna believe that a Dell consultant is going to tell them a ton of things that they don't already know and so if the but what they're going to do is enable you and your staff to take the things you know you should be doing and actually do them on a consistent basis and it's no different than the consulting that we do for our clients I mean if you say some if you tell somebody hey you know what you need to save and you need to be tax efficient well they're like duh but they still don't do it because they don't have the accountability of the processes to to get it done and so I think that's where you know consultants like cane waters or consultants like dental consultants really come into play is they  get you to do two things that you probably know you should be doing already 

Howard: yeah but you could say the same about a personal trainer I mean I I did 300 man's three years in a row and I only did it because I hired Jane and Wendy they'd switch off and every day one of them was knocking on my door five o'clock in the morning while I was laying in my bed cussing and wishing I had a shotgun and the hardest step is the first step out the door and you you wrote the reason I called you to come on this shows I loved your dental town magazine article in the March 2019 salary negotiation CPA Judson Crawford discusses salary trends and dental practices and strategies that could help you get your percentages back staff labor is tough because they give them a raise every time the earth goes around the Sun so they give them a raise based on astrology they start out good and buy time they're 50 60 years old I mean there's dentists that are my age that have 35% labor cost absolutely so I'm talk about that how do you even by the way I also won't tell you that my podcast the DSO guys they used to always buy dental offices they  don't even do it anymore they switch to de novo because when they buy your dental office with 30% staff labor and the first thing they got to do is go tell your assistant of 30 years that instead of making $28 an hour she's gonna make $18 an hour I mean it's just not fun fact most DSO say I'd rather start a de novo and run it at a loss for six months to a year then go in there and turn your sinking ship around so if you're thinking in the back year walnut brain that your exit strategy is selling to a DSO you bet you better get your house in order first and the first thing they're gonna look at is is is labor so what would it what's is you've seen labor so far

Judson Crawford:  oh gosh yeah probably high 30s you know and remember your labor the labor the normal practice is going to be the most expensive single line item in your business for your entire career okay and so you know you want to make sure that that line a line item is  appropriate because man it's probably the one outside of maybe dental supplies that get people in the most trouble like you said and  you're exactly right that people the way people get into trouble with that is they feel like they have to give raises every year or they're going to lose staff in the problem in a dental office although people can get better at things and  maybe take on some additional responsibilities it's not a corporate structure where you know you start as staff accountant and you go up to manager and then you get you know taking on more and more responsibilities to a great extent your 21 year old assistant if she stays with you until she's 45 isn't me doing many of the exact same things she was doing them when she was 21 so it's more important that they stay similar to industry standards than then necessarily giving them a raise every year and I know that is a is a hard a hard thing to do especially because a lot of our people like to take care of their staff and they like to you know we like to help them but they have to they have to mind where their practice is going you know and make sure that that they're paying appropriately sometimes bonuses can be kind of done in lieu of consistent raises there are ways that you can tie bonuses to keep the percentage in line and that's one way where you don't necessarily do raises every year you know people that deserve raises are the ones that are below average you know if you hire an assistant and she's 15 dollars an hour and most people are 20 in your area then you've got some room to grow but if you've got an assistant that's making 21 22 and the average is 20 in your area you know cost of living adjustments at best are are appropriate and then the other thing that is so common you'll have doctors that are there paying their staff members above average pay rates but they haven't increased their own fees in seven years you know and so every year when they're given out raises guess whose pocket it's coming out of all their own because they're not increasing their fees appropriately as time goes by either so it's kind of like a double whammy for many doctors and that's how you really get into the sinking ship of having you know twenty five thirty five percent in total salaries 

Howard: but you know when you go get a job at McDonald's you don't you don't get a raise every year and work there from 25 to 65 they say you know you're making $70 an hour they tell you when you get a job McDonald's here's the pay range for your position here's the pay range for an assistant and hygienic so we have a pay range so we set expectations so once you're at the top of the pay range say say for a dental assistant it's 20 you say for hygienists it's 40 and what's happened to that well I've had two dental assistants in 32 years decided screw this I'm going to dental school and now they're both dentist one in Arizona one in Florida shout-out to Kelly and Elena I just lost my faith one of my favorite assistants of 15 years and what did he do he went back to school he was dental assistant he's gonna be a hygienist and shout out to yoni so you know you can't say well I've assisted you for thirty years so I should make the same as a dentist and on the other hand you just can't give him a dollar raise every time there it goes around the Sun I can't believe we went over an hour but I want to go back to something some of the you said that I'll argue with or disagree with you tongue-in-cheek you you said that the the highest overhead is a labor correct but when I got out of school in 87 I just sent the bill to Delta and they paid a hundred percent if it was clean exam and x-ray they played half as a crown and eighty percent filling work now  they send me the fee schedule and that's been a 42 percent reduction in fee so I would say that signing up for PPOs which about 95 percent dentists are members of Delta so I would say your PPO reduction is the number one expense labor is number two but I'm not as CPAs I don't know if that's technically correct but Labor's number two but I would end on this because I can't believe we talked for over an hour but Americans spend more money on taxes than food clothing and housing combined and we started earlier my dad used to sing it to me driving down the car and his big old Lincoln Town Car with a CB radio the golden ghost which turned me on to social media he'd say how is the easiest dollar earned is a dollar and expenses say the second easiest dollar earned is a dollar in taxes delayed but the hardest blankety blank blank blank blank blank blank dollar you'll ever earn is cook at another hamburger so how do you help dentists save money from the tax collector and is that a big deal what you do 

Judson Crawford: absolutely tax efficiency is is huge again in order for our clients to be able to have as much as they can at the end of the day you're right you know in in many in many states depending on your state income taxes in property taxes and city and state I mean you know we find clients from between add in payroll taxes you may be paying 50 plus percent of your income in in some tax or the other and so every dollar that you could say from that is essential you know one of the biggest ways is to save into tax deferred environments for our clients I mean we know we need to save for retirement we like tax savings you know so so 401ks cash balance plan defined benefits plan defined benefit plans we often can get clients you know two hundred two hundred and fifty a year if they have that type of money to save away tax tax deferred which is a huge one the other thing that that a lot of clients that frankly either don't use are scared to use or they have a CPA that's super conservative and don't want them to use is using their business to become tax efficient um you know and this is not being fraudulent but you know are you are you looking at your children that maybe in their teens and can you pay them to take money out of your tax environment and put it into bears you know are you running a propria meals and vacations that are related to business travel you're running those through you have you put a car on your business you know do you own your own do you own your own property and can we do some things to accelerate the depreciation on your building you get more tax advantages now so there's a there's a million things that you can do but the problem I would say for the most part is either one lack of knowledge on behalf of the dentist which they shouldn't be the ones that are necessarily trying to tell them how to do their stuff but most the time it's either CPA is not giving advice because they're so focused on just doing the tax returns at the end of the year and not so focused on giving advice or being too afraid to advise them to put a car on the business or advise them to pay their kids when it could be easily it could be easily explainable to the IRS to do so Howard:  well but you also have national dental placements in DPS national dental placements Dom was found in 2005 with the help with the mission of helping young dentists find established practices and assisting the transition ownership the company has significantly evolved since that time talk about that how is national dental placements calm

Judson Crawford:  yeah so it's great it's a great company obviously it's our sister company so cane waters historically with our you know 2,000 clients we've always aided our clients in transitioning their dental practice but that process is part of it is because we know and we can value our dental practices because we've been working with them forever and we know that the details of them but what we found over time is is that there are there obviously you know Doc's that want to retire and want to find an associate that haven't been haven't been clients of cane waters and and so you know NDP was kind of our our beginning of saying okay look we're gonna serve this other huge area in the dental field of maybe that aren't cane waters clients so they do brokerage services if you want to sell your practice and can't find an associate they'll come alongside help you value it and help you find somebody to buy your practice we do a lot of buyer buy your type of advising so you know if you're if you're somebody that's looking at a Dilla practice out there and you've got somebody that says hey here's a dental practice that's for sale and basically what they send you is a 90 page that you have no idea about or maybe a contract for purchase you know these are the people that will come alongside you for a reasonable dollar amount tell you about the valuation advise you on whether this is a good path for you help you with understanding the cash flow of the business things like that so the buyer has representation as well and not just the seller you know they'll do what they'll do valuations if you just want a valuation and you've got somebody that's gonna buy it they'll do a valuation so they have a lot of great services that they provide 

Howard: now is that still ran by Christie Ratcliffe sure yes you just walk by my door well Utah she should come on the show and talk about it because I'm again if you go a third of a million dollars down the road with other people's money I believe you have gone too far and now it's time that you buy your own practice and I think just is what it is you can't sometimes you can't go half way you know what I mean I'll connect misty would be fantastic on here for sure yeah is there anything you want to talk about today that I was too stupid to bring up 

Judson Crawford: no I know I I don't think so I think that you know we covered a big long range of topics I think that number one if you're listening to this podcast it's because you do care about learning more in your business and your life so you're clearly invested somehow whether it's Kayne waters or another financial adviser that can help you get from where you are now to a better financial place don't you know invest in yourself a little bit you know what we always tell our clients don't you think that your financial where foot welfare is worth investing one full day making sure it's going in the right direction I think the answer is absolutely yes so you know if we can help any of your listeners we'd love to do it my takeaways for you are we will get the how does your practice compare report link post it on dental town and I will connect you with Christie Ratliff because I think she'd be a great guest for you

Howard:  as well yeah and the other thing is you know I live out here in Phoenix and Scottsdale has Mayo Clinic so does Rochester or so design Jacksonville Florida and a lot of people I know a lot of dentists who I've had dinner with because they got tired of their health care in their small town and came down here and found out that Mayo Clinic found out you know huge misdiagnosis just fix off I mean my gosh I know so many of your clients and they have no problem getting on Southwest Airlines for 200 bucks and flying a direct flight to Dallas and spending the day with you don't have to use your CPA down the street and remember the year 2000 there were no medical specialists and now you're using an accountant who's not even a specialist in dentistry and it's so complex I mean it's just it's just crazy to live like that so jump on an airplane fly to Dallas the only thing I love Dallas I still can't figure out whether or not all Arizona Cardinals fans is still like those Cowboys but everyone can be perfect Judson Crawford CPA IAR thank you so much for coming on the show today and spending an hour of my homeys now thank you I appreciate it I enjoyed every minute of it and thank you for all the listeners out there listening alright buddy have a rockin hot day

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