ROSS BRANNON

What does Benchmarks do, and how do you serve the dental community?

JOELLE JUMP

We do accounting for dental practices, but we really focus on their operations. We're not going to just give you your financials and say, "Have a great day." Although you do get financials monthly, we work on KPIs, or, “key performance indicators,” that are specific to the dental practice to help you increase profits. To see where your revenue is coming, where to trim some fat, and where we may be able to market into the community a little more and focus on certain demographics.

ROSS BRANNON

That's really interesting. Talk about the difference between traditional bookkeeping and what you do, how you take it up a level.

JOELLE JUMP

A traditional bookkeeper is going to be great at categorizing some expenses, putting them into financials that are tax ready, which you can send over to your tax professional and get your taxes done. That’s important, but we do it a little differently. We're going to categorize expenses in a way that helps you understand where you're actually spending your money.

For example, we have dental supplies and lab supplies. We break it down into big chunks, so you can see the difference in spending, but we also go over it with you. I’m never going to send you reporting and expect you to digest it on your own. We're going to have a phone call and talk about it, and then we're going to give you another report that gives you your goal to actual. How much do you want to make versus where you're at now? What does your cash burn look like? How much are you spending every month? What does your patient retention look like? Are all the deposits that are going into your practice management software making it to the bank? We reconcile that. What's your profit margin per associate, if you have associates? How much is your hygiene bringing in monthly? It goes a little deeper than just preparing tax ready financials, which are great for taxes and CPAs, not so great when you're trying to run a practice.

ROSS BRANNON

Tell me about someone who had a traditional bookkeeper and switched to Benchmarks, and after a quarter or two, saw the difference. What are their reactions?

JOELLE JUMP

They just feel calmer. When you can understand the levers that you have to push or pull or move just a tad, and you can see where little tweaks result in real changes in your bank balance and your profit margin, that’s huge. It’s such a lifted weight. Because everyone stresses. You look at the bank account and you ask yourself, “Is it good? Is it not good? Where are we at?” Meanwhile, you're trying to manage a team, and serve the patients. You're in the chair all day, and then you're supposed to go home and learn how to read financials? That’s not feasible. We can take that off of them. Now they’re thinking, "Thank goodness someone is handling this for me," and thanking me for taking the time to explain it so they don't have to worry about it. It's just taking something off the list so you can focus on patients.

ROSS BRANNON

What do you see as unique complexities for dentists who owns their own practices?

JOELLE JUMP

There are a lot of moving parts in a dental practice. There’s the dentist with the actual service serving the patient. Then you have the team that's supporting the dentist. Then you're dealing with the insurance provider. You have vendors coming in. Everybody's trying to sell you a piece of equipment. Everybody has a better deal on dental supplies. Everybody has their hand out to dental practices.

As a dental practice owner, you are the provider, you are the manager, you're everything. You're almost a one-man shop with all these people asking for things from you, and it's exhausting, so the support we give is really a game changer.

ROSS BRANNON

Do you have an ideal client?

JOELLE JUMP

We have a lot of emerging dental practices, but some of our practices have been around for more than 50 years and have gone generational. We can build a package around whatever they need. You need financials quarterly? Great, we can do that. You need us to work with the bank for you? No problem. You only need them for taxes because you're brand new and you don't need to look at this all the time? That's fine too. You just need someone to jump on the phone to answer a QuickBooks question? We can do that too. We work with all types and all specialties, but my favorite part is watching an emerging dentist become that five to seven-year-old practice.

The reason Benchmarks came about is we benchmark. We'll say, "When we look at your practice compared to other practices like yours in your area at this revenue size, this is how your spending compares to them." We can dissect it by specialty, by location, by revenue size. As long as you're that dental specific, we can throw some benchmarks together and grow with you. We like to think of ourselves as partners, just trying to take something off the plate so you can focus on your patients.

ROSS BRANNON

Do you help these practices create goals? Do you have any conversations about what they should be doing, or revenue they should be earning?

JOELLE JUMP

We definitely say things like, "Based on your square footage, you can easily add $500,000 to $1 million more to the practice without doing anything else,” or, "If you add one more assistant and open up these hours, you can do this.” But the reason we focus on bookkeeping and accounting is we are specialists in that area. Then, we like to work with the financial planner, the tax accountant, the lawyer, anyone on the team, and try to get everybody on the phone and make sure everyone's moving in the same direction. We love to work with whoever's at the table.

ROSS BRANNON

What type of trends do you see in the dental world?

JOELLE JUMP

DSOs are big. We’re also seeing a lot of the “done in ones”, or the implant, a lot of general dentistry trying to add more to the menu, and how they can be unique. Plus, a lot of my clients are forming holding companies, and they’ll get a couple locations and build that up. Real estate is huge, and I think it’s going to be an even bigger deal coming up, because I think we're going to see a decline in commercial property prices with COVID and everyone working from home.

ROSS BRANNON

Do you see too many dentists working in their practice, rather than on their practice?

JOELLE JUMP

A ton. This is the hard part, especially for brand new dentists. I recommend scheduling time to work on your practice. We call them planning days. As a new dentist, at least one planning day a week will save you so much spinning and putting out fires. It helps really plan where you're going and how to get there. Then, as you get associates, you pull back. I have some practices whose owners do not actually practice. They don't see patients, they're just running the business, and those practices value much higher than those whose doctors are working “in” the practice fully as opposed to “on.” That's a self-managed company, and that's what you want to get to, because your valuation is amazing. Then, if and when you're ready to sell, they can do it without you so you don't have to commit to another five or seven years working in the practice for someone else.

ROSS BRANNON

What does “work on your practice” mean to you?

JOELLE JUMP

A practical example would be scheduling your employees, checking to see that your insurance claims are going through, making sure you have your cashflow planned out as it's supposed to be, setting money aside, looking at debt, making sure that your debt is structured right, making sure you're saving, taking time to sit with the financial advisor, or the CPA, or whoever, to make sure you're not spending too much at home and taking too much out of the practice. Just taking time to make sure you're in a good position financially.

ROSS BRANNON

What would you say is the biggest mistake that dentists who own their own practice are making?

JOELLE JUMP

Usually, it's spending too much at home. They're putting too much weight on the practice, which the practice can't support.

ROSS BRANNON

Expenses rise to meet income. And if you don't have a structure for your cashflow to create a systematic savings plan, then you just start spending, and we get this kind of subconscious entitlement, which can be deadly. Then if you get a slowdown, like COVID, even though there was PPP money, it was still challenging. Was there anything that you took away that really helped your clients through the pandemic?

JOELLE JUMP

I worked with my clients pretty heavily during COVID. The big thing was just, “Be the solution. Be there for your community. Be there to help, be open, be available.”

Those who had cash set aside, and were prepared, and had been working on that for two to three years prior, didn't feel the slowdown. They got the PPP money, but didn't really use most of it. They furloughed some employees for a little bit when it was a complete lockdown, but they kept all their employees. They kept most of their patients. Some actually saw higher revenues because they were seeing so many emergencies. Because they were prepared, they went into it saying, “Here we go. This is what we planned for." They didn't skip a beat. It was great.

ROSS BRANNON

What would you say to a dentist who wants to dip into their safety cash cushion to buy the newest, sexiest equipment?

JOELLE JUMP

We don't recommend that. I love the equipment guys from Patterson and Schein et all, that show up at the end of the year. They say, "Hey, get that deduction." They aren’t realistic.

ROSS BRANNON

They would like you to spend a dollar so you could save 35 cents.

JOELLE JUMP

If that! If you even have the retained earnings to take the loss. I caution my clients before they buy any piece of equipment, “Let's talk about it. What is the ROI going to be? If you buy this piece of equipment, what return on your investment are you going to get and how long is it going to take for you to get that return?” What if they’re paying an extra $1,100 a month, but won’t see the return until it's paid off in five years? Does that make sense for their cashflow? I’m a big proponent of talking about it before they pull the trigger.

ROSS BRANNON

From a cushion standpoint, what do you recommend typically? That's a big deal, because often that equipment purchase is coming from the cushion.

JOELLE JUMP

Everybody has their number. Many will say, “I need $100,000 sitting in an account for me to feel comfortable.”

I like three to six months of payroll. If you can’t think of a realistic number, I suggest having between three and six months of an average payroll set aside somewhere.

ROSS BRANNON

How is technology making life easier for your clients worldwide?

JOELLE JUMP

We don't need a lot of interaction with any of the clients. We don't interfere. We schedule calls and we use Zoom and we can screen share, and we can have face-to-face conversations, but on a day-to-day basis, we can get the information we need. We access bank accounts and credit cards and download the information and get it coded. There may be some expenses we need to ask about, but for the most part, we know dental so we are very familiar with most of the vendors. The technology has really helped us streamline this, and take it almost all the way off the doctor's plate so they can focus on what they do, which is patient service, and we can focus on what we do, which is putting the numbers together so we can dissect the business. With Zoom, it’s great that you can see whoever you're working with and build a relationship without having to be in person.

ROSS BRANNON

What do you think the future of tax looks like for dentists?

JOELLE JUMP

I see the tax definitely going up, but I think you're going to see a lot of dental savings plans. I've already seen this: dental insurance isn't covering anything, and people are asking, "Why am I paying for this when I can go to my dental office and they have a plan where I pay however much?" I think that's going to be really big. I think that's really going to help people retain patients.

DSOs are coming in strong, so I see the valuations on practices going up significantly, but the cost of labor is going up as well. However, I think people in general are going to the dentist more, and they understand the need. It’s not as much of a “want to,” now they see it as a “have to,” so it’s becoming less of a commodity.

ROSS BRANNON

What is a dental savings plan?

JOELLE JUMP

A lot of my clients are doing this. It's almost like a membership. Patients get free hygiene, or just pay for X-rays. The patient retention that comes from that is great, and honestly, it's cheaper than dental insurance, and it covers more. You don't have to worry about contracts and rates and making sure claims are filed on time and correctly.

ROSS BRANNON

Why do you think DSOs’ valuations of practices are going to increase?

JOELLE JUMP

I think they're chasing rate of return, and they're starting to get attention from the big guys, the bigger equity partners. So, they're looking to build something that's going to be worth more to the next guy at this point.

ROSS BRANNON

We have one mutual friend who thinks within five years, 75% of dental practices will be owned by DSOs. What is your take on that statement?

JOELLE JUMP

I agree. The valuations that DSOs are giving to these single owner dentists are creating a market where it’s difficult to compete. They have better deals. They have bigger buying power. They're getting supplies cheaper. They are paying the labor, which is getting crazy.

ROSS BRANNON

How much are you seeing in hourly rates?

JOELLE JUMP

I just saw an assistant who was making $15 an hour, go to $25 an hour with a DSO.

ROSS BRANNON

If I'm fresh out of dental school and I've always dreamed of owning my own practice, why would I open a practice, grow it, and sell it in eight or nine years, if I can work for corporate dentistry, since they're going to own the market?

JOELLE JUMP

The only reason I would do that is to build something quick and sell it to somebody. But eight or nine years from now, it might not be even worth it. Coming out of school like that, I would buy something, just be a partner somewhere, or one of the practicing investors.

ROSS BRANNON

Do you think DSOs aren’t as interested in more rural areas?

JOELLE JUMP

Yes, while I think in five years a large percentage of practices will be owned by DSOs, in the rural communities, you'll still have that single owner dentist that can do really well.

ROSS BRANNON

They consider many more factors than multiples when buying, correct?

JOELLE JUMP

Absolutely. Is it a self-managed business? What does cashflow look like? What does patient retention look like? The due diligence is extensive. They're looking at the whole practice. Its history, its location, its contracts, including insurance, its fees; they’re taking all of this into account.

ROSS BRANNON

Are you seeing it only predominantly with generals? What about specialists?

JOELLE JUMP

No, not nearly as many of those, but the DSOs are really popular with orthos in Arizona, Colorado, Texas and Utah, and they're looking hard in other states. Some of the DSOs are getting jumbo practices, and those valuations are crazy. I’m seeing some that are eight times EBITDA. I wouldn't blame anybody for selling at this level.

ROSS BRANNON

Who does a dentist need to have on their team in terms of professional advisors to guide them over the long haul?

JOELLE JUMP

You need a really great CPA, a really good financial planner, and I would suggest a really good bookkeeper.

ROSS BRANNON

What does the phrase “financial health” mean to you?

JOELLE JUMP

I don't equate it to the dollars in the bank account. That will get there. Financial health is planning. Financial health is actively doing something, ideally at least weekly, to make sure you are going to end up in a better place than how you started the year. Are you maintaining? It's like a car. You can't just drive your car into the ground. You have to have an end game.

To me, financial health is just flossing. Are you doing the things you need to do to stay healthy? Are you looking at your money? Are you planning for the future? Are you watching your cashflow? Are you sticking to a budget or are you just drawing out and spending whatever you want? Do you understand what's coming up in next week? Have you planned for that? It's a state of not living in chaos.

ROSS BRANNON

What would you say is the best advice you ever received?

JOELLE JUMP

Your expenses will rise to your income. That is 1,000% true. When we plan, we say, "This is how much payroll is, so this much has to go into that bucket. This is how much has to go into the bucket to pay back a loan. What if you want to take your family to Europe next year? Then start planning that. Make a bucket for that.” Because if you leave it all in that operating account, you will spend it because it is sitting there. That is what we do as humans. That's just who we are.

ROSS BRANNON

What are you reading right now?

JOELLE JUMP

There are a few. I’m rereading Five Dysfunctions of a Team, Who Not How by Dan Sullivan. I love Gino Wickman, who wrote Traction and a couple books about EOS, the Entrepreneurial Operational System. I'm also reading Girl, Wash Your Face. I read as much as a I can.

ROSS BRANNON

What advice would you give to someone just starting a practice?

JOELLE JUMP

I like the rinse and repeat model. Yes, be unique. Yes, try new things. But do it for three to four months and if it doesn’t work, make small adjustments. Do not try to do everything at once, and make huge changes all at once, because then you don't know what works and what doesn't work. Try it, track it, adjust it. Give yourself time and be smart. Don’t buy every brand-new thing out there. Just start where you're at and make small changes and give them time to take root, and then decide if you want to try to do something different. Do not rebuild Rome. Rome was not built in a day.

ROSS BRANNON

What does the future hold for you and for Benchmarks Financial Group? Where do you see yourselves going?

JOELLE JUMP

I love the dental group. I think we're going to work on a lot of transitions. I think we’re going to help people start practices and sell them. We’re going to do that by building this package where you’re going to have the history of your practice, so when you go to sell and they ask you for it, you’re going to look like the biggest rockstar out there. Brokers tell me, "This was so easy and this transaction was so great." Plus, it helps valuation. It will help you get the highest valuation. I think that's where we're going to end, because that's where the industry is going.

If we can do that, it’s awesome because it helps our client, the dentist, and honestly that’s all we worry about. We know numbers, we know dental practices, and this is how we can serve.

ROSS BRANNON

Thank you for sharing such great insights.