In the latest installment of Barry D. The Lab Guy, Laboratory Owner Mike Hill explains his strategies for protecting the bottom line.
As you know, running a successful dental lab requires more than just great technical knowledge and skills; you need to be a good businessperson. In light of rising material, fuel and labor costs and the increase in business taxes and regulations, we need to be even more focused on the bottom line.
Here are some ways I've reduced costs in my laboratory:
Make the most of vendor visits:
Manufacturer/supplier representatives can offer a lot of new product information, insights on how your competitors are doing and business-building tips. Since material costs represent about 22% of my overall costs, I try to spend quality time with vendor representatives when they visit my lab. I talk to them about ways we can save money or build our business. For example, I had an implant representative stop by recently who was able to get one of my technicians into a local educational seminar for free.
During these visits, make a point to ask about special promotions as most companies frequently have some kind of pricing deal available. For instance, last summer we were able to buy two porcelain ovens at 0% interest for 24 months.
The point is you need to engage the sales representatives who visit your laboratory. They're usually there for a meaningful reason; for me, saving money is a meaningful reason.
Save on continuing education costs:
Materials and technology are changing fast so, for the last few years, I've set aside $500 per employee for continuing education. To save money on our educational expenses, we try to avoid having more than one staff member attend a specific workshop or training seminar. After a technician attends a course, he presents what he learned to the rest of the staff during a production meeting; this educates those who didn't attend and reinforces what the attendee learned.
Chase the pennies:
My accountant comes in twice a week to handle my bills and payroll and once a month, we attack our P&L statement. I have 22 categories of expenses and we try to audit two categories per month. We approach this exercise with the mindset that we're overpaying and we look at every way we can cut costs; nothing is sacred. For example, I spent almost $2,000 last year on lunches with my sales staff. By switching to morning coffee or afternoon meetings, we expect to reduce that to less than $500 this year.
You can reduce a lot of financial stress by just spending a little more time each week to focus on your numbers. Knowing you are making a profit is different than thinking you are.