The Money Tool Roadmap

Episode #473 with Dr. Barrett Straub

Do you ever wonder where your money is going? Do you want a better grasp on your financial health? If you do, you need ACT’s newest resource, the Money Tool Roadmap! And today, Kirk Behrendt brings back Dr. Barrett Straub, ACT’s CEO, to talk about how this tool will help you understand profitability, manage your cash flow, and create more true profit. To learn more about the Money Tool Roadmap and how to get it, listen to Episode 473 of The Best Practices Show!

Main Takeaways:

Understand the sweet spot of profitability.

Habits are more powerful than willpower.

Learn to save early — and save a lot.

Don't make decisions based on fear.

Know the meaning of true profit.

Quotes:

“It’s a very stressful day when you don't have financial margin, you don't have extra money in the bank, you don't have a rainy-day fund. When you're in those positions and collections dip, that gets really stressful.” (3:57—4:10)

“There's not a clear line between these four, but there are roughly four financial life phases. The first is, you're out of school. We call it high uncertainty and high debt. Most dentists graduate with a lot of debt. They're going into practice, they're going to buy a house, they have a new family, they're buying cars. They're starting to enter real life. So, high debt. Then, they have uncertainty, ‘Where will I practice? What's my earning potential? Will I be fast enough, clinically? Will I be able to sell dentistry?’ We think we’ll be good dentists, but there's still high uncertainty. Both, that high debt and that high uncertainty, cloud our decision-making.” (8:36—9:18)

“I, in that [high debt, high uncertainty] phase, said to myself a couple times, ‘I'm going to see if there's any money left over at the end of the year. And if there's any extra, I'll invest it.’ And guess what? There wasn't any money left. And then, I did it for another year. And then, finally, I learned an important lesson.” (9:19—9:36)

“The next phase is phase two. High debt, still, but a little bit lower uncertainty. So, maybe you've been out of practice a few years. Maybe you're a brand-new practice owner. You're starting to figure it out a little bit. But you’ve still got, especially if you just bought a practice, your debt even increased because you've got a practice loan. Maybe bought some equipment to upgrade the office. So, now, you’ve found your speed. You're getting a little more confident, dental wise. Your debt load just went up, so you still have that stress. Again, that's a very easy phase to say, ‘I've got too much debt. I'm going to wait a few more years. In a couple years, I'll have enough money to start really investing.’” (9:36—10:22)

“Phase three is moderate debt. So, now, we’re paying off some of the debt. Maybe you've been a practice owner for a handful of years. The dentistry is getting easier. The uncertainty is getting low now, but you still have moderate debt. Now is where, often, dentists take the next step in practice upgrades. Maybe you buy a CEREC. Maybe you buy a CBCT. You still don't know where your money is. You still say, ‘Boy, I'm paying a lot of tax. I don't see this money.’” (10:24—10:53)

“Phase three is where you're like, ‘Shoot. I'm 38 years old. I thought I'd have a lot more money saved away. I thought I'd be doing pretty good. I have some, but I need more.’ Then, you say, ‘But in a couple more years, I'll really be able to sock it away.’” (11:14—11:36)

“Then, you get to that last phase, your late 40s, maybe early 50s. You really got low debt, really low uncertainty. You've got dentistry figured out. You're rolling. And then, you go to your financial advisor. It’s like, ‘Okay, let's start nailing this down, when I can retire, and all that,’ and your advisor says, ‘You can't retire for a long time. You don't have nearly enough saved. Oh, and by the way, your practice isn't worth nearly what you think it is.’ So, now, you thought you're going to have a ton. You thought you’d retire when you want to retire, and you can't. And that's a bummer, because now you're working not because you want to but because you have to. And we want dentists to say, when they're 60 years old, ‘I don't have to work another day if I don't want to. But I still want to because I love dentistry and I love what it does.” (11:36—12:27)

“When you don't have any margin, you make bad decisions. It’s hard to sleep. When you have more margin and you have some discipline, financially, you can make decisions from a position of strength.” (12:39—12:49)

“Parkinson’s law basically says that your needs for the money will rise to meet the supply. So, I like to say money does, in fact, burn a hole in your pocket. If you have it in your checking account, you will find reasons to spend it. And there are often valid reasons: technology, equipment, supplies, stuff for your kids, stuff for your house, a bigger house. There are always good, valid reasons to spend money. And so, Parkinson’s law is, if it’s in your checking account, you're going to spend it.” (14:02—14:33)

“Your best dentists, they all saved money. And not only did they all save money, they all saved money in all four phases. Now, it doesn't mean they're saving the same amount. You get started early, you chip away, you do what you can. But the most important in that phase one and phase two, if the dentists don't develop the habit of saving, this automation, this process, this save-before-I-even-see-it, it gets really hard to do that in phase three and four because three and four are your money-making phases. That's when you really have got to put it away.” (14:43—15:37)

“There are some of us that have amazing willpower. And you'll always fail in terms of financial health when compared to the habit automation process. So, the habit of saving money, the process of saving money, automatic investing before it hits your checkbook — if you never see it, you can't spend it. And so, willpower, the, ‘There should be some extra at the end of the year. I'll invest it then,’ I tried that. I lost. It didn't work. I found things to spend it on.” (16:33—17:05)

“There were some years where my habit of saving kind of hurt a little bit — not hurt, but you watch some of your colleagues and your friends, and it’s like, ‘Oh. They're buying lots of stuff. What am I doing wrong? Why can't I do that?’ And then, I had to remind myself over some years, ‘I know why they're buying that cottage up north. I know why they bought that house or that boat. They're not saving as much as me.’ But, in the end, this is how I want to live. I want to live within my means. I want to save. And some day, it’s going to all pay off.” (17:10—17:44)

“My willpower doesn't work on M&M’s.” (19:37—19:38)

“Banks get this. They understand Parkinson’s law very well, because they don't often allow you to, ‘Hey, write us a check at the end of the month with what's left over.’ They say, ‘We’re going to set up an automatic withdrawal. It’s going to come right out of your checking account on the 5th of the month, and your practice loan is coming to us before you figure out you don't have enough money.’” (20:02—20:24)

“That day comes [when] your practice loan is paid off. That's a huge amount of money, and you could put it into your checking account. It’d be amazing. But I say, ‘Hey, I found a way to live without this. I don't want to see it. Let's just take that automatic payment that goes to the bank, let's put it right into investments, go to retirement savings.’ I've never seen my practice loan. That same amount goes right to the 401K every month.” (20:39—21:07)

“If you're a dentist and you've ever said, ‘I feel like I'm paying a lot more than I should for the taxes I'm paying,’ you need this [Money Roadmap]. If you've said, ‘Where did all my money go? I'm just not following it,’ you need this Roadmap. If you don't know the amount that you should be putting into your checking account at the end of the month, you need this. And if you're not looking at your PnL, cashflow, and balance sheet every month and knowing what to draw from all three of those, you need this.” (28:08—28:39)

“Profitability has a sweet spot. And I call the sweet spot the place where, number one, a couple things happen. You’ve increased your production as much as you can within the current capacity. So, if you're working four days a week, before you ever add a day, before you ever buy a practice, before you ever add an associate, before you increase capacity, I want you to maximize the revenue that you can make within your current capacity. Why would you ever add capacity before you've maximized your current production within your current capacity?” (31:11—31:46)

“It’s human nature to base decisions on fear. It’s human nature to buy into that uncertainty that we talked about in those life phases and say, ‘I can't start saving. But in a couple years . . . But in a couple years . . . But in a couple years . . .’ And what we’re saying, we’re big on core values and our beliefs. Barry Schwartz, Paradox of Choice, he says you want to base your decisions on your beliefs and values, not fear. You want your decisions to be guided by goals, not your fear. And then, once you make a decision, you have to execute it. Making a decision is easy. Now, you have to execute it. And you can use habits, you can use automation, or you can just try and do willpower, and fail.” (37:25—38:11)

Snippets:

0:00 Introduction.

2:02 Why the Money Tool Roadmap is important.  

8:21 The four financial life phases.

13:51 Parkinson’s law, explained.

16:12 Willpower versus habit, automation, and process.

19:45 Convert debt payment into an asset.

23:39 Know where your money is going.

26:55 More about the Profitability Roadmap and Money Tool Roadmap.

29:50 The sweet spot of profitability.

32:21 Defining capacity.

35:52 Fear-based decisions have consequences.

42:25 Producer Andy’s topic for the day: birthdays.

51:09 Money Roadmap overview.

57:12 Defining true profit.

59:25 Last thoughts.

Reach Out to Dr. Straub:

Dr. Straub’s Facebook: https://www.facebook.com/barrett.d.straub

Dr. Straub’s social media: @bstraub10

Producer Andy’s email: andy@actdental.com 

Resources:

ACT Dental’s Money Tool Roadmap launches November 2022! https://www.actdental.com/money

Profit First by Mike Michalowicz: https://profitfirstbook.com/

The Paradox of Choice by Barry Schwartz: https://bookshop.org/books/the-paradox-of-choice-why-more-is-less-9780062449924/9780060005696

Join ACT Dental’s To The Top study club: https://www.actdental.com/ttt

ACT Dental’s PPO Roadmap: https://form.jotform.com/221574987947173

Dr. Barrett Straub Bio:

Dr. Barrett Straub practices general and sedation dentistry in Port Washington, Wisconsin. He has worked hard to develop his practice into a top-performing, fee-for-service practice that focuses on improving the lives of patients through dentistry. 

A graduate of Marquette Dental School, Dr. Straub’s advanced training and CE includes work at the Spear Institute, LVI, DOCS, and as a member of the Milwaukee Study Club. He is a past member of the Wisconsin Dental Association Board of Trustees and was awarded the Marquette Dental School 2017 Young Alumnus of the Year. As a former ACT coaching client that experienced first-hand the transformation that coaching can provide, he is passionate about helping other dentists create the practice they’ve always wanted.  

Dr. Straub loves to hunt, golf, and spend winter on the ice, curling. He is married to Katie, with two daughters, Abby and Elizabeth.