The dental industry, like any other, isn’t immune to a slowing economy. As we approach 2024, Property taxes, property insurance costs, inflation, and changing tax laws all loom large on the horizon, prompting dental offices to prepare for a possible economic slowdown. But that does not mean that we must face this uncertainty ignorant or alone. Here we discuss some best practices for preparing your business for a tumultuous 2024.
What Should You Expect for 2024?
- Rising Costs: Property taxes and insurance premiums are on the rise, potentially increasing rent expenses for dental office spaces.
- Inflation-Driven Wage Increases: Inflation will likely lead to higher wages for hourly staff.
- Softness in Collections: The first half of 2024 may see slower collections as patients become more cautious with their spending.
- Higher Taxes: Anticipate higher taxes as some deductions passed during the Trump Administration phase out.
What Should You Do to Prepare for 2024?
- Collaborate with Your Dental CPA: Work with your dental CPA to create a budget and forecast for your practice.
- Invest in Real Estate: If possible, invest in real estate in 2023 before less favorable tax laws take effect.
- Build Cash Reserves: Maintain 3-4 months of operating expenses in cash reserves.
- Boost Marketing Efforts: Invest heavily in marketing to attract new patients and offset lower collections and case acceptance rates.
- Explore Practice Acquisition: During a slow down there could be opportunities to expand your practice at a lower investment then a typical new build. Consider purchasing an office from retiring dentists with a solid infrastructure in place.
In summary, being proactive in the face of economic uncertainty is key for dental offices in 2024. Expect rising costs, wage inflation, softer collections, and higher taxes, and take action by collaborating with your CPA, investing wisely, building reserves, enhancing marketing efforts, and exploring practice acquisitions. These strategies will help your practice weather future economic challenges and thrive.
Here is to your best financial future
The VC Team