Hi, everyone, and welcome to the Delivering WOW Dental podcast. I am super excited to have you guys here. Today, we're talking all about team bonuses, how do we create bonuses for our team members, when is the right time to be able to provide a bonus and what is the most efficient, effective, and profitable way to be able to provide bonuses to our teams.
And so we're going to cover all of that. If you've not yet had a chance, I would love to invite you to join us inside of our dental boss entrepreneur Facebook group, where we have thousands of dentists coming together to be able to learn how to better run, grow, and scale their businesses.
To join us there, you can head on over to dentalbossentrepreneurs.com. So inside of our Facebook group, we did have a question come in that was asking about team bonuses. How do we incentivize our teams? What percentage of production should we give to be able to bonus our team members?
And so I wanted to spend some time answering this because there are specific strategies that we can use and things that I want you to actually consider that perhaps you might not have considered. Now, I will tell you, I remember being that practice owner early in my career, making a lot of mistakes.
And the mistake that I made was that if I want to have team members do the things that I'd like for them to do, which is to be able to have patients follow up and schedule treatment. If I want team members to go out and help me with marketing, if I want team members to help to hit our practice goals that are in our whiteboards, I would need to just give them extra money to do the things.
And I really had that mindset and I was telling myself that story of that is how I can actually get them to do the things. Until I remember one of my early coaches coming to me and she said, "Anissa, let's look at your numbers. Let's look at your profitability."
And once I did that, I realized that, and I really knew it to be honest with you as well, that I really didn't have the money to be able to do that. In fact, at that time, I was actually not really paying myself much of a salary. But I love my team members and I wanted to be able to do more for them.
And again, I had the belief that in order to get them to do things, I'd actually have to pay them bonus. And so again, I was just taking money out of basically my own pocket, what was not even there, and paying them. And so maybe you're that doctor right now that is paying team members bonuses.
That's looking at production and saying, "Okay, I'm going to give them this amount." And maybe you don't know your numbers yet. And so I want to make sure that this episode really serves you and that you understand exactly how to know when is the right time to give a bonus, and again, how do we actually provide a bonus?
Because believe it or not, the lie has been told that we are to give a bonus on production. And oftentimes many of you might have even heard me tell my lemonade story of when I was back eight or nine years old, I had this idea to get a Rainbow Brite doll. And my mom said, "Okay, we can get it for you at Christmas."
And I said, "I want to get it sooner. Can I go out and have a lemonade stand?" And so we went to Winn-Dixie, we got the sugar and the ice and the cups. And the next day I literally went around knocking on doors and I said, "I'm Anissa. I love around the corner. I'm wanting to get a doll. I'd love if you could come out."
Gave them my address, "At 12 o'clock and support me so that I can get this doll." Well, 12 o'clock came and the line was down the street and I actually sold all the lemonade. And I got really excited. I'm like, "Mom, I'm going to be able to get my doll." And she said, "Anissa, I'm so proud of you. You had a great idea for a business.
You actually had a great product, and your marketing was great. All of your lemonade was sold. But I really need you to understand that today you did not make 17 dollars and 58 cents. Today, you made three dollars and 24 cents because the rest, the cups and the sugar and the ice, that's actually what it actually cost you to make three dollars in your business.
And so I remember back to that time when I was giving bonuses based on production, not knowing what my numbers were. And guys, if that's where you are right now, it is actually a little bit dangerous. And so as we start thinking about, "Okay. I get it, Anissa. My eyes are open.
My ears are open and hearing you, how do we do things differently?" One of the things that we want to look at is how do we know our profitability. How do we understand what our business is actually making?
And what's really interesting is that as I'm asking practice owners, when we're going through our business boot camps, what I'm discovering is so many people really just have no idea what their business is making on a monthly basis or on a weekly basis or on a daily basis.
And at a minimum, you really do need to know how much your business is actually making. And this is not production. This is not collection. And so the question is, well, how do I know how to do that?
And so one of the things that I encourage you to do is to have a process where you have a team member that every single Monday, for example, they're pulling a report from your practice management software, that now allows you to be able to see your production and to be able to see your collection month to date.
So every Monday, for example, that number's being put into a template or to an Excel sheet or written on a piece of paper or written into a whiteboard. From there, what's also really powerful is having a process, where as your bills are coming in, those bills are being put in place as well into that template.
So even if you're not paying the bill that particular week, it's being entered in. So now you can look at your cash flow ahead of time, you can see what's coming in and now you can subtract the outstanding that is due for that month, from what's actually come in for that month on a weekly basis.
So you can actually see where you stand for the business. This is pretty powerful. If you've not yet been a part of our business acceleration boot camps, I highly encourage you to get in there. We actually provide the template. We actually teach you exactly how to do this, which is really, really powerful and insightful for you to have that information.
But now, you know how much you're actually profiting. And it is off of that number because that is the money that you are actually making after all of your bills are paid, after your team is paid, after your lab bill is paid, after your rent is paid, after your utilities are paid.
And now off of that money, off of that amount, you can now go ahead and say, "Well, you know what? I'm going to give my team 5%, 10%." Right? And what I also encourage doctors to do is to actually have this calculated and do this calculation quarterly. Because there will be months where you will have more profits and there will be months where you will have less profit.
And so it's really nice at the end of a quarter to do an average of your actual profit and to go ahead and set your calculation there. All right. So that's one thing that I highly, highly recommend.
The other thing is really helping your team to understand that profitability is actually what allows you to be able to give them additional earnings so that they can do more and take care of their families, have those vacations, and to be able to buy their dream homes and all the things that they're working for, just like you're working for things to be able to do for your family.
And so as we're looking at how do we increase profit, it is yes, increasing our high-value services, it is looking at ensuring that those insurance payments are going in, that statements are going out. It is really understanding what profits are actually coming in from different PPOs that you're using.
Because now that you have that knowledge, you can see if it makes sense to be able to go with this PPO.. Or maybe you're doing specific services, for example, ortho, so we're going to choose one PPO over another. Okay. So that's something that we want to look at.
Another thing that I highly recommend is for your team to understand that profits don't mean that's how much your doctor is making. And so as I'm working with teams, as my team is aware, profit is not what the doctor makes, profit is where we can now have the ability to make decisions about taking courses, and buying new pieces of equipment.
And of that profit, you can actually allocate a set percentage that goes into an expense account for travel, or that goes into an investment account for the business so that money can be compounded, or that can go into that rainy day fund.
And of course, as a practice owner, you do have the benefit of being able to take dividends out of the profits that are coming in as well, which is obviously one of the benefits of making a decision to own your own business. All right.
So as you are thinking about building your bonus system, the first thing again, that we want to look at is how do we understand our actual profits versus just understanding our production and our collection. We also want to have a system to be able to know how to calculate that number. And again, not you, your team.
You've got people for that. Really simple processes allow them to be able to calculate that. And then having a way for you again, to decide, okay, we're going to go ahead and give out whatever percent. It could be 5%, 10% to your team. And that's done typically on a quarterly basis. All right, guys.
So hopefully that was super helpful for you. If you've not yet had a chance, we'd love to invite you to join us inside of our next business acceleration boot camp, where we'll be sharing more strategies for you to grow your practice, as well as helping you to understand how to get to those numbers to be able to grow your practice, provide more earnings opportunity for your team, and to be able to build that practice of your dreams.
Thanks for listening to another episode of the Delivering WOW Dental podcast. Now the next step is to join us inside of our next free business acceleration workshop. And to join us, head on over to deliveringwowbootcamp.com.