252: The Financial Playbook Dental Practice Owners Need to Stop Flying Blind

Your IRS is your business partner because they take 20% or 30%. I mean, they're probably the best definition of a silent partner because they don't really say much during the year, but at the end they just stick their hand out and say, where's my cut?

Hi, I'm Emmett Scott and just like you, I've had my ups and downs in the dental industry, but times are changing. The DEO has built a map of how to succeed in one of the most challenging industries to navigate. On this show we talk to dental industry leaders, solve problems and get you the answers you need to face these challenging times and thrive. Welcome to DEO's Secrets podcast for dental organizations. Now let's get started. Hello everyone and welcome to another episode of DEO Grow Secrets. I'm your fearless host, Emmett Scott and today we're talking to Jared Duckett and Caleb Gusner from Ducket Lad. And we're so grateful to have both of you on here. I'm going to give a little bit of your bio here, but to give everyone context, we know what the stress is right now around tax, financials, cash flow, et cetera. So we're going to get into that. Jared is a partner and co founder of Ducket Lad, which is a dental specific business consulting, tax and financial service firm and serving dentists nationwide. Duckett Lads strives daily to improve the lives of both their team members and clients and has done an incredible job with DEO members helping them get their financials and tax organized. And Caleb is director of emerging groups. I'm excited to talk with you, Caleb about kind of why you guys have that as a separate component. But he does accounting and fractional CFO work at Ducket Lad, also dental specific for tax and financial services for the company. So thank you both for being on here. It's nice to have experts as we get into year end and we see with our members and business owners that they are all stressing about all the things that should they have done. Where are they at cash flow wise? So I want to hit on all of it and maybe we start off just right with the heavy stuff that everyone wants, which is what do I need to do before the end of the year to make sure I pay the least amount to what I now call my government business partner. I mean anyone who's taking 20, 30, 40%, it's the one worst profit sharing plan that we none of us put a contract together except I guess being in America. So we have to, we've signed off on it and maybe the only business partner that we encourage you to figure out how to take advantage of. So, you know, how do we, how do we lower that distribution as much as possible? So I'll start with you, Jared. You know, as you think through with clients, what are kind of the common places that you go to in the checklist to say? All right, these are just the simple things that everyone should be doing to not be overpaying in that area. Yeah.

Great question. First off, thanks for having us on. It's funny when you kind of go into the. I guess I've thought of this before, but it kind of hits my memory again. Like, your IRS is your business partner because they take 20 or 30%. I mean, they're probably the, the best definition of a silent partner, right? Because they don't really say much during the year, but at the end they just stick their hand down and say, where's my cut? Right. But I guess I'll answer that question in, in one way. And Caleb, I think you can riff with me on this is we're, we're sports guys, right? But we really like to look at, like, taxes as really like your, your tax playbook. And I'll riff, I'll riff with, like, the football analogy here a little bit, is really what you, what you want to do. And then I'll go into what most people do. But what you want to do is show up to that big game, right. Going into the Big 12 championship, let's call it right now, you, you got that playbook you usually coaches. I'm not a football coach at all, but usually coaches know, like, what the first 12 plays of the game are going to be. They've got that mapped out. That needs to be how you look at taxes. You need to have a tax playbook going into the first quarter of the game or the first quarter of your year. What are Those easy first 12 plays going to be? And we'll talk through that, like, Augusta rule stuff, paying your kids and that sort of thing here in just a minute. Because the, the benefit of that, of starting out early is, is if you don't have that playbook in place and you get to the second quarter, third quarter or now, right, Fourth quarter of the game, and it's like, oh, crap, we're losing by three touchdowns. What am I going to do? Sometimes it's hard to make up that ground, right? So you need to have that playbook going in. So if you're hearing me now and you're like, well, Jared, I, I, I, it's fourth quarter. I really haven't thought about this. Put that playbook in plan for next year. Get with your CPA or advisor and say, hey, I need that playbook. And then you, you work for that throughout the year. Now let's say you don't have that playbook in place and it's fourth quarter, what do you do?

First house Hail Mary plays here, right?

Hail Mary is a play. Yeah.

By the way, I really appreciate you calling out the Big 12 championship. I had to throw that in Texas Tech. You knew, you knew that would be my love right there. So, yeah, we'll see how that plays out.

Rooting for you, man. Rooting for you. I love upsets, but no, like get with your cpa and if you're doing it, doing this yourself, this is anything to do with yourself, don't TikTok this, don't YouTube this or whatever and try to figure out what those plays are going to be. Get with your CPA and first off, have good clarity into what your business looks like. Meaning what those books are. If your books aren't clean, that CPA or advisor is, it's not going to be able to give you a good accurate depiction of what your tax liability is. Right. But you know, he had the one big beautiful bill or whatever you called it, that, that, that you know was passed a lot of depreciation stuff in there that you can take advantage of. You're going to hear us all the time. Caleb, I heard you say this to a client the other day through your glass wall of don't let the tax tail wag the dog. Meaning do not go out and buy a whole bunch of equipment right now

on December 15 that you don't need.

That you don't need.

Yeah. If you're going to buy and six Suburbans in your front yard because you.

Yeah, one Suburban's enough. Right. But don out and buy, you know, you know, more cbcts. If you're not going to use them, you know, they'll go more lasers if you're not going to use them. I always say if you're going to buy them in the first six months or so of next year and you have a tax liability going on, probably try to squeeze that in if you can. But the bonus depreciation is a big deal. The section of 179, you know, you hit the, the Suburban, that gross vehicle weight rating of 6,000 pounds, you know, make sure you get it is documented that that's business use. It's easy for an auditor to look at it and be like, what is that? Document it, say you're using it, you know, or use it or just say it, use it. Over 50% business use to get that deduction. But then low hanging fruit, all, you know, the sweet plays in football, your, your line, your runs right up the middle. You know, you've got Augusta rule stuff. And a lot of people are like, well, you know, I've heard about these tax strategies. I don't know how I can incorporate them in your business. We like to use the terminology a lot of times. You know, sometimes to change your tax you have to change your facts. So the IRS has written the code in a certain way that you can change how you do some things to take advantage of it. Let's say the Augusta rule. Let's say you're going out and you're paying for conference rooms to have all team meetings or you're having meetings at your house already. Take advantage of that. Pay yourself a rent that you can deduct and don't have to pick up. Right. Vehicle deductions are a big one as well. One of the also big things, and I'll stop hitting on specifics of tax, but is, is the pass through entity tax, meaning, you know, in the one big beautiful bill, or actually before that, they limited how much you could deduct for state and local taxes. Normally back in the day, if you paid $50,000 of state taxes, personal taxes, right. You can deduct that if you itemize. They got rid of that way back when and capped it at 10,000. But all these states have different workarounds that you need to try to take advantage of. The one big beautiful bill kind of changed some things on that. But if you're not, it's pte, pass through entity. If you're not taking advantage of that, ask your cpa. It depends on what state you live in. There's usually meat on the bone right there. That's just, you just, it's just a different way to pay your tax in order to take advantage of. So those are some low hanging fruits.

What about qualified plans too? Should we just say something quick about those qualified plans?

For sure. You know, just make sure you're, you're structuring your retirement plans in order to max those out if you can, you know, another easy one. And again, I don't want you to just hear it and be like that. That Ducket guy said, I can pay my kids through my business. You can pay your kids through your business. But I pay my kids through my business. You know, my eighth grader she works and I pay her.

Right.

And the ability there is, I get to deduct those wages that I pay to her and if we keep it below the 14,000 or whatever it is for the year, she doesn't have to pick that up as income. And also if you structure properly there doesn't have to be any payroll taxes paid on that as well. So by my kiddo working, I pay her. It's, you know, you got multiple kids, you can, you can use that strategy. So a lot of low hanging fruit to you need to look at you.

You mentioned in the beginning there getting the financials organized. Maybe we can just kind of lay that out. You know, when you go to your cpa there's kind of, I'm going to oversimplify this but there's two streams of income that are going to hit the 1040 or the tax return. One's the W2 portion, if you will, that you paid yourself. And then the hopefully bigger one is what was the net income that flowed through from the business. And if your financials aren't organized then you're kind of missing that second one. And so you're going to your CPA saying so what do you think my tax bill is going to be? It's like so how's your finance? Yeah, how's your business doing? It's like, I don't know, I haven't gotten that organized yet. Right. So maybe we could talk about that Caleb, a little bit about the financials piece and kind of what you're seeing there and maybe some misunderstandings too. Because the other piece that sometimes people get confused about is they go wait, you're saying that's my net income. But I've got these student loans, I'm paying, I'm paying for this business I bought and I've got all the, I bought an X ray machine. I don't see that on my P and L. So can you kind of just talk about profit loss statement for a minute?

Yeah, yeah, absolutely. So you know, I, I think to, to hit on the first part, Emmett, it's really critical and important that we're getting timely and accurate financials. Right. Trying to tax plan. Right. Jared, we've been in situations like this where cpa, you know, comes in CPA firm and here's a shoebox of data, figure out what happened. Recipe for disaster for tax planning. Right. Recipe for disaster for navigating as a business owner. Right. We, that's a different topic for a different day. But just not having clear, accurate data for your Tax consultant, your tax preparer. Major red flag for them. Frustration for you. Frustration for them. No one wins. So, to your point, Emmett, on having clear, concise, accurate data monthly, right. Whether you have someone internally doing that for you or you're paying to outsource that critical, vital step in the tax planning process that really gets overlooked because, well, my bookkeeper doesn't do taxes. You're correct, they don't. But they are the cornerstone for good, accurate tax planning. So we need to make sure we have a system and process in place for getting clean, accurate data. Really should be getting on a monthly basis, right. By the 10th, 15th of each month, you take that data, really, quarterly, Jarrett, to your tax preparer. So that we're doing this right. Jared alluded to your playbook. Each quarter, we. We're doing the same thing, like in a football game, reevaluating each quarter, what's happening, right? And when we're in, we're, you know, we're.

And let's hit on that. Part of the reason you want to go each quarter is you don't want to be overpaying or underpaying your quarterly tax payments that you probably have. You underpay those, you're going to have some extra penalties, interest. You overpay them, and you're pulling cash flow out of the business. And personally, that you're handing the irs, yes, you'll get them back. Back later. But why would you want to give somebody at 0% interest, right. That money all year long? So being able to look at that on a quarterly basis, am I still on track? Is this still the right number? What's the safe harbor that I have to be into to not have any penalties? But then also, what do I just need to be accumulating on my side?

Appropriately, correct?

Yeah, yeah.

AB. Absolutely. No. I think one of the most frustrating pain points we have from some clients are on two opposite ends of the spectrum, right? One is, well, I've paid these quarterly estimates my entire life, and it's always been $10,000. Why are you telling me I have to pay $50,000 this quarter? Well, dynamic tax planning, tax preparers and consultants understand that dynamics of the business change, right? You guys remember this thing called Covid that happened, and businesses shut down where you didn't have any income coming in? Why would you pay a quarterly tax payment when you had no income, right? So just dynamics change there. And then on the. On the flip side of, well, I've never paid quarterly estimates. I didn't even know quarterly estimates were a Thing, you know, just the dynamics of the business always changing. Make sure you have someone in your corner who's dynamic enough that they're. We're evaluating this on a quarterly basis. And Emmett, to answer your second question on, can we talk through the differences and hey, my, my CPA saying I have this big net income bill, you know, big net income tax bills here. I don't have any cash. Like, how am I going to pay this thing? Right. I didn't, I didn't proactively tax plan. I have just simple math, right? 500 grand of net income taxed at, you know, 20%, 30%, whatever. That equates to a large tax bill. I have 10,000 bucks in, in the bank. What happened?

150,000 owed, 10,000 in the bank. Yeah. Where did things go wrong and what's leaking out? Because he says this is my net income, but man, I'm not feeling it.

Yeah, yeah. And it's unfortunate that it happens more often than not that when clients come to us. Right. And you guys experience this in the coaching world too, of, you know, this is what the data says. But I don't feel that. Right. I don't, I don't understand what the disconnect is. What's the leaky bucket here? Well, things that don't show up on your P and L. That is really the living, breathing document that everyone says I need to look at it on a monthly basis. Well, it's a little more holistic than that. Right. Any debt, principal payments. So we're paying off debt whether that's in the business or personally. Right. Emmett, you alluded to student loans earlier. Yeah. Hey, that 10 grand, you know, went to dental school. Dental school's expensive. Right. You're pulling out 10k for debt in the car and things like that. Well, that doesn't show up on your P and L. And it's not tax deductible. Right. We have owner distributions that, hey, you know those country club memberships that you, you pay for and oh, hey, yeah, that vacation I went to Hawaii for? That was a business expense. Well, you know, not going to get into the minutia and gray area of what we can and can't write off on this podcast? That's an argument for a different day. But if it's not legitimate, that's an owner distribution. That's not going to show up on your P and L. So you're not going to see that expense. But it's cash that came out of the business affecting your cash flow. Other leaky buckets we can see if you pay for equipment in cash, right, that's not going to show up on your P and L. You'll see the depreciation expense, but the actual purchase of that equipment. We pulled cash out of the business to go buy that equipment. Maybe it was a tax play per se, maybe it wasn't. Well, that's cash that came out throughout the course of the year. Multi, multitude of different items we can. We can pinpoint that are leaky buckets that aren't going to show up on just that one PNL statement.

I think it starts. If I was going to put the layers together, the start of the confusion is, number one, because almost everybody's an S Corp, and so they aren't paying themselves a full associate equivalent wage, but they want to live off of at least what their associate would make off of that. That they look at that net income and they forget that maybe they're only paying themselves 10,000amonth, but they kind of deserve 30,000amonth based on their production. And so that net income is a little overstated. Right on what they would get. And so one of the things that we do, I know you guys do. Is do some math calculations of like, hey, if you were an associate, what is the true passive income happening in the business versus, like, what's the active income? Keep your S Corp flow happening. But also understand from an operational perspective, you may not be as profitable as you think you are once you. And I think a lot of that happens because dentists are great at taking care of patients, trying to take care of their staff, learning new procedures, et cetera, but not necessarily looking at those expenses and what are my numbers and true passive income. I think the second thing that gets layered in there is we just don't think through the fact that when I took out the loan, I didn't have to recognize it as income. Therefore, when I pay back the loan, I don't get to recognize it as an expense. And the only part I do is the difference, which is interest expense. So we see the interest on there, but we don't see any principal payments. And maybe if you're doing some depreciation piece, that kind of fills a little bit of the gap. That might even feel like, no, it was on there, but. But that's a totally different, you know, piece that's coming through. Before the podcast started, you and I were talking and you said, you know, people forget that there's three financial statements, not just one. So do you want to kind of talk through, you know, profit and loss balance sheet and cash flow statements and kind of each of their roles.

Yeah, absolutely. So again that I think the breadwinner and what everyone hypes up the most is your P and L. Right. How much income did I have? What was my expense equals my cash, right? No, that's exactly the point we're making today. So P and L again and deo's got some great benchmarks. You know we actually follow the DEO benchmarks in our consulting. Right. I think we're, we're very in alignment Emmett on some of those target areas. Do's got some great resources there on what those ideal overhead expense categories should be to get you down ultimately to a 20 to 25% profit margin depending on if you have a management company, so on and so forth. Well let's take it a step further after the P and L, right. So we have our income, we have our expenses. We have this financial statement called a statement of cash flow which is going to take that net income and go one step further and add back any of those non cash items. So Emmett, to your point, hey I saw depreciation on the P and L that that incorporates cash flow. Well no, depreciation is a non cash item. Right. We don't pay cash every month for that depreciation expense we pay for the loan but we're not paying that out of pocket every month. And so your statement of cash flows is really going to walk you through the three different areas of finance add backs. Right. Investing activities, operational activities and equity activities. So I know I'm getting nerdy on you guys. Simplify this for you. Really what it's doing is adding back any non cash items to that net income. So depreciation, amortization, really the big ones, subtracting out cash items that aren't on the P and L. Very simple debt payments like we were just talking about a little bit ago. Any owner distributions or contributions. So Emmett, to your point, hey I, I am producing 60k a month. I'm paying myself 10k a month. Really I probably should have been paid 20 so I'm going to pull that extra 10 out. My CPA says I only have to pay myself a hundred or ten k a month w2 wage but I deserve that extra 10k that is going to pay for the country club membership, the trips, whatever case may be. That's cash coming out of a business guys.

So nowadays that house payment and food. But yes, it used to be something more sophisticated before.

Yeah, yeah, I'm dating myself a little bit 10 years ago. So we see that statement of cash flows give us that true depiction of what our cash flow is for the month, which leads us to the balance sheet. Right. And probably the most underutilized financial statement in my opinion. And again, guys, I'm an accountant. I'm nerdy, I get it. But balance sheet tells us everything. What's our cash position doing? Are we increasing cash? Are we decreasing cash? Are we adding equipment? Are we reinvesting back in the business to see an ROI? Are we. Are we buying those to Jared's point, CBT's and things that are going to increase our clinical procedures to increase profitability. Right. It's just a circular reference in how we grade ourselves. Right. Cash on the balance sheet, is it going up or down? Are we reinvesting back in the business via equipment, things like that? Are we in a financial pinch where we're having to pull money out from the bank, we're having to get lines of credit and finance things that really we probably shouldn't be? Do we see our debt going up or our debt going down? And then how are we as a business owner, Emmett? It is probably the biggest obstacle we run into. I'm curious what your take is here on again, to the point of a little bit of entitlement, of, hey, you know, I deserve this, I'm going to pull money out. And whether it puts my business in a position, a bad position or not, I'm not necessarily worried about it because it all falls back on me, you know, but we look at the balance sheet, we evaluate, it's, hey, guys, maybe we need to reevaluate some of the decisions we're making when we look at this holistically, not just looking at the P and L every month.

Yeah. I think it's that journey we talk about from clinician to entrepreneur and business owner that, you know, all of our business owners have been on and not maturing past that. I call entrepreneurship the teenage stage and not maturing into what I call executive function. Right. So it's way more fun, for example, to be like, I open to practice. Right. And you almost see, like, a repetitive nature of going off of my gut. I'm adding Invisalign. I'm doing this. It's that as dopamine hits. And along those lines, it's like, yeah, what am I doing with my cash flow? Kind of whatever. I'm feeling either a lot of stress or a lot of excitement. I had a really good month, et cetera. But it's not executive level. It's not here's my profit and loss statement. By the way, it's way more fun to tell your friends you open a new practice than you got your chart of accounts organized on your profit and loss statement, Right? So I see why that happens. But the maturity that we're really teaching at DEO is if we can cross what I call the second chasm. Right. The first chasm from clinician to business owner was kind of a zip line, like, yay. You know, the second chasm is more like a rock climbing. Right. It's very like, where do I need to place my hands? It's much more meticulous, not nearly as exciting, except it makes a lot of money and that's the part that I like about it. And it lowers stress 98%, I think, of business owner stress is not having financial clarity, is that they're still operating from an entrepreneurial stance and you just can't. You're running a multi million dollar business, right? And so to do that, if I always like, role play. If you were sitting in a car with your buddy and he's like, man, my business taking off. I'm running a multimillion dollar business now. You're like, cool. So, like financial statements, how are you guys doing? I don't know. I don't get those done. You know, like what, what would you say to him? Like, what, what's going on?

You know what they're going to say, right? We're crushing it. We're killing it, man.

We're killing it. Yeah. I looked at the bank account until next month, so I think it does require a next level of maturity. And let me go into this a little bit because I think this is where you guys stand out and why we've liked our partnership with you all is that number one, it's very difficult to spend the money you really need to in this area of your business. And the reason it's difficult is because it's super clear to spend money on CE credits and revenue. Revenue producing activities, marketing, all of that. Like the ROI seems, you know, pretty much in my face. I get it. It's kind of required to spend it in the operational front. Like, I lose an office manager, I got to pay for that stuff. I need a dental assistant, I need a hygienist. And I can kind of tie that back to revenue. Accounting is always a non revenue producing clarity activity. And so a lot of times we go on the cheap, right? And what that ends up looking like is I just do my own. My husband's doing it he's just running a spreadsheet. I've got a friend, she said she'd do it for a couple hundred bucks. And maybe the most deceptive version. I'd love to talk to you guys about how you've overcome. This is my CPA who does my tax returns. I'm just having him do it. He's got a bookkeeping gal. And I'm always very critical of that. And the reason is, is because most of the time I say, hey, so do you have your books? Well, oh, because it's tax season. It's super busy for them. They're not able to do it right now. And I'm like, you're trying to run a multimillion dollar business and you're waiting on their business. That doesn't. I would fire that person right now. I think it's also an immaturity of not understanding that sometimes the person who's good on filing the tax return isn't the same company that can help you get your books organized. And also I often see that those books are not organized for operational purposes because all that's needed for tax, taxes, revenue minus expenses, what is the net income? And so the fact that things aren't in the right place, etc, is like, well, I don't really need that for tax. Now. I, I say all of that because I believe that's like 90 to 95% of the CPA firms that I see out there trying to do bookkeeping on the side. So I'd love for you guys, you guys are doing that differently. But that takes a very purposeful, disciplined approach. So maybe, Jared, you could talk about this because you guys are doing the tax, you are doing the bookkeeping. And how have you. And you've even started to divide out single practice from multi practice within your firm. So your level of discipline and thinking through this, maybe you could talk about that. So if people are out there searching, they kind of know that, right? Questions to ask behind the scenes, the black box to know, is this a Duckett Lad type CPA firm or is this my more traditional, I'll get to your books when I can?

Yeah. No, I mean, financial statements are everything. And again, Caleb, I'll say what you said, it sounds nerdy me saying it that way, but the financial statements are telling you the story of your business. No questions about it, right? And they should be telling you, I guess, two things and they can tell you a lot more. But if you're just. If you're not doing financial statements for your business, you really don't know how well you're doing at all. All you're doing is operating off that bank account, which is absolutely terrible. I hate to say it that way. That bank account doesn't tell you areas of improvement. So your financial statements should tell you basically two things. How your business is doing from an industry benchmark. Percentages, right? Like, are you trying to hit that 20% profit margin? All right, you should be able to look very, very, very quickly for the month, year to date, comparative, whatever. Like, where am I off compared to those industry benchmarks? You know, am I spending too much? Is my payroll too high? Everybody's is, right? Where do I need, you know, what do I need to do to get these industry benchmarks in line? But then also they should tell you the story in regard to taxes as well. And. And again, our services. We can marry the two together. Because I'll go back, Caleb, to what you said on, like the cash flow, that statement of cash flow. What you need to see is a business that's generating a lot of cash. That's the number one thing in any business, right? Cash flow is king. But the problem a lot of times, if you're not looking at the tax as well, that business owner is taking out that cash every month and then they get caught at the end of the year with a big tax bill and they have to put that money back in. A part of our service is basically that cash management Caleb that you mentioned is every quarter and we add on to it every month after that. Is keeping that cash aside. Kind of like a profit first mentality, but not in line with the whole buckets and everything, but just keeping the tax money on the side and then paying that in as you go. And then the benefit is at the end of the year, hopefully you've got a little too much in tax. And then it's kind of like a little Christmas presents. Like, oh, yeah, like I got a surplus of 10 grand in my tax account. I can kind of sweep it over, right? That's the benefit of looking that tax in conjunction with that cash flow.

But how have you set up your company internally to make sure that during tax season people are still getting timely

financials departments before, I guess I should say in our past life, you just didn't design the business. The business wasn't designed to deliver that service, you know, and now with, with

departments, you had kind of one guy in charge. I mean, you. Right, you're in charge of everything. And so if. And because that tax return is federally required, you know, no one's going to say, hey, I didn't, I didn't get your tax returns done because I wanted to get your financials completed. Right, Right. So it did take priority. But you guys have scaled to a point where you're able to divide that out.

Yeah, basically our team, you know, we've got basically a solo groups department and an emerging groups department. Our solos is anybody that owns one or two practices. Emerging groups is anybody three or more. That's the department Caleb oversees. But basically that team, it's fair to say, Caleb, throughout the year, every month is almost identical. They don't know if it's tax season or not. On their side. Our tax team's a different story. They know when it's tax season, they know when it's not. But that's all they do is taxes. Right. So it's just streamlined on creating and scaling and getting bigger where you can do that. Putting departments in place and putting KRAs for positions and KPIs in place to allow people to just focus on that specific area. So I don't badmouth any CPAs at all. But if you're working with a CPA that's saying, hey, your February and March financial statements, we're not going to get those till you, till May or June when we get less busy. No, you're the customer. You need to be like, I need my financial statements by the 15th or the 20th of the month. That's what I need as a business owner. Go to somebody and get that. You don't need to delay getting that information.

I find many business owners. Yeah. Feel very kind of trapped and nervous about that conversation to make that move. I mean, maybe just to reemphasize that it's interesting. There's things we would never tolerate from a dental assistant or a team member, but we tolerate from CPA firms all the time. And these excuses and not getting the product out, you know. And again, things happen for every situation. But when we talk about on a regular basis, I don't know how my business is doing for three month increments. You know, that just seems like a failure of executing on your core responsibility for, you know, business ownership.

Well, it kind of goes back to what you said, Emmett. Like we're not the cheapest in regard to services, but you have to look at accounting services and consulting service and coaching services like you guys. It's an investment. You have to look at it as an investment. And what sort of ROI are you getting on that investment? If you're looking as an expense immediately, you're going, well, how much? What's the smallest amount I can pay to get the bare minimum?

Right?

That's the wrong mindset. Everything on your PNL should be an investment. What in what ROI am I getting out of that investment? Let's say you're paying DO for coaching. You guys are awesome at coaching. You're going to see that roi. On top of that, you're going to want to invest more, right? Because you're getting more out of it. That's what you should look at as accounting services as well, because the ROI you should get is the value from those financial statements as well as the tax to figure out how you make your business more profitable and keep more of what you make.

And I kind of use kind of a minimum threshold, which is pretty high, which is a 500% return, meaning I want a 5x on whatever I spend. And when I look at being able to look at my financial statements cleanly, the ability to do that, whatever I might be getting charged in the marketplace to have clean financials is not that hard to get a 5x return. So to your point, it's about ROI versus, you know, someone who's like, yeah, I'm just paying a couple of hundred bucks and it's really cheap. Yeah, I don't get them timely. I'm like, just take the couple hundred bucks and go out to dinner. Then like, we're not using them for anything. They're not time like, you know, or flush it down the toilet. It's the most expensive, you know, few hundred dollars you're spending on versus something that's done with quality. To say, ooh, my labor cost. Oh, what happened here on my supply purchase? Oh, it looks like we're starting to trend up really nicely. I need to start thinking through the tax side and maybe more strategy there than I realized, you know, man, to get that 5x return easy. Plus just like sleeping at night, you know, I know how things are trending. I understand my business. I've got a strategy based that's tied back to financials. My KPIs are not kites without a string. Right? They're KPIs. So when I say KPIs for those, you know, if you've got dental, Intel OS, dental, practice by numbers, any of those platforms, Jarvis, et cetera. Many times when you don't have P Ls, they're kind of kites without a string. They're just like, everyone hit green. I paid bonuses and I lost money. What's going on here? And so getting key Performance indicators should be indicating profitability at some point. So when you start layering in, you know, Caleb, to your point, like this nerdy conversation just happens to lower your stress, improve your profitability. It's, it's pretty powerful place to spend the money and get the roi. So.

Yeah.

Well, one thing, one thing you said, Emmett, that hit my radar is we talk about all the time internally about like the power of 1%. Right. So if you look, and I'm terrible at math, I know I'm an accountant, but I need a 10 key. If you're dealing with that million dollar dental practice and that 1%, that's, that's 10,000 bucks. If you're not looking at your P. L on a, on a monthly basis and you can go in once you get that good data and shave. I say the word shave, but shave off or chisel off 3, 4, 5% in certain areas, that adds up really, really fast.

Yeah.

And that's just on the solo side. Let's get with Caleb. You know, working with a lot of clients that say they're a $10 million group, let's go in and figure out where they're off 5% and they don't have that data in front of them. That stuff adds up really, really fast. So you can easily see where not getting good data, you're missing out on a lot of money. It's the leaky buckets. They're just going out the, going out the bucket.

I think too, as entrepreneurs we think that innovation is strategy and really strategy is prioritization. And the only way to prioritize is to know what's working and what's not. And so I see a lot of times like, oh, my practice isn't doing well. I think I have the idea I'm going to open another one. You know, I have an idea. I'm going to add specialty. I'm going to. And some of those can be appropriate, which almost can be a false positive because if it works and then the next time it's actually not appropriate. But you are shooting in the dark. But many times what I see is adding a lot of noise actually is decreasing profitability. You know, I threw in invisalign or I did this or did that and that's actually pulling profitability down. I'm doing too many in our five stages of profitability. I'm doing too many launching profit activities, trying to get to break even. And they're kind of buried within the practice there. And you know the one I always hear is we're Going to do sleep now and we're going to, you know, like each of these are new activities that can actually suck more money than they add to the profitability. They might even add to the top line a little bit. But when you net it out, it's not actually making money. So. Cool. Any other final thoughts? Yeah, go ahead, Jerry.

One thing there you hit on and I think this maybe is an Alex Hormozi concept, or maybe I saw something he said, but you said the word priorities, right? Or priority. And I think what a lot of business owners, especially dental practice owners, get into the wrong mentality of is let's say they're looking to go into 20, 26 and they're listing off like the 5 to 10 priorities for the year. And if you really get down to what a priority is, five or ten things cannot be all priorities. Priority is one if you actually think about it.

Right.

So what I would recommend is when you're looking at that, and again, you have to have good clarity into your financial data and your operations and how things work. But look at it be like, what's the one thing?

Right.

Or what's the one biggest thing that if I do and achieve and accomplish will impact my business the most? Just the most. And if you just do that one thing first off, you're probably going to get it done because you're just focusing on that one thing. But just doing that one thing is going to be more impactful than doing all 10 of these little things. So that's where I talk to business owners all the time. They're like, man, I'm going to do this, this and this and this, like you said, and sleep and this and this. Another practice. It's like, no, what's the one thing you can do to impact your business the most? It's hard to figure out what that one thing is. But you can't really do it unless you have good data in front of you.

Yeah, yeah. I think that's the difference. When the one benefit we all have is a lot of repetition of looking at dental practices that work and don't work. And so just like a dentist looks in a mouth and they know instantly like, okay, here's the procedures I'm going to have to do. We've just seen enough reps to say those who are focused and kind of simpler minded do better. Those who are like very innovative and lots of ideas and dynamic extroverts struggle, you know, because they're just trying to do too many things at once. Anything else in closing Here, Caleb.

Yeah, I think, you know, I really took the nerdy part of the conversation and so to, to kind of put a bow on that. You know, going into 2026, you know, I think Jared, you, Emmett, you guys had some really good points. I think if I'm prioritizing anything on the financials, right? If I'm a business, I'm just going to use the example I'm a business owner who doesn't get financials right now or I do and I don't understand them. Priority for me going into 2026, right? My 1 priority. This is what I'm going to do. I'm not going to try to focus on nine things. One is get a better understanding of how to read and understand your financials. That's, that's basic concept 101 of entrepreneurship, right? Emmett? I cannot scale a business without understanding how to read my financial statements. Ask your DEO coach. Hey, can we take 30 minutes and you, can you just walk me through how do I read this, how do I understand this, how does this P and L connect to the cash flow statement, connect to the balance sheet and then how do I take that data and go make good decisions? Because I think oftentimes, you know, you can throw your P Ls in AI or whatever and they'll give you some suggestions or whatever. But unless you have a good base understanding of how to read the financials and connect the dots to make decisions, really to all of our points, there's no, you can get clean data all day long in the 10th, but if you don't know how to read them, if you don't understand the language of business, right, Warren Buffett Accounting is the language of business. If you don't understand that, we're never going to see you scale throughout the phases that the wants you to.

It's awesome. I love that. If you're a DO member, I've loaded in just recently into our app the foundation courses and one of them specifically, Caleb, you'll appreciate this is how to read financial statements, chart of account, et cetera. If people want to reach out to you, they go, I've seen the light, I get it. I need to have these organized. I would like to sleep better at night. I would like to understand my tax bill before April 15, those kind of things. What's the best way for them to, to chat with you all?

Yeah, the best way to reach out to us is just go to our website and click on the work together form. It's just duckit Lab dot Com. Two T's, two D's. Our team will reach out, follow us on social media, YouTube. We try to put out really good content if we can, just. Just to educate. But yeah, just reach out and we'd love to help.

That's duck at D U C K E T T and then lad L A D D. Right Dot com.

That's right. I will say, on that priority thing, I was just thinking, I have found one instance where that really doesn't work in regard to priorities, and that's my golf swing. I used to work on 10 things at once and I had a golf coach say, hey, just focus on this one thing. I still haven't fixed my golf swing, so maybe that's the only.

Yeah.

Oh, it got worse.

There's some things, you know, it's. Do you persevere? Pivot? Maybe you should start thinking about basketball or pickleball. Pickleball, you know, that's the. That's the sport for all people. That, not golf. Pickleball is still the one there for us, so. Well, it's been great chatting with you all. I appreciate you being so transparent and open. This is a place that can feel very intimidating to business owners. It is the scoreboard. Scorecard. As you guys, I've appreciated Caleb, you going into some of that detail and jargon. It's actually super helpful. I think everyone walks away from this feeling a little more educated. There's been some fun tax strategies that have been talked about, so thanks to both of you. Also, if you want to reach out to them and you're in the DEO app, they are under our vent vendor directory under tax Strategy. So great to have you guys there as well. And until next time, keep smiling. Thank you for listening to deo's Growth Secrets podcast for dental organizations. Continue the conversation on our Facebook group and meet other dental leaders. Get questions answered and the strategies you need to succeed. Plus, we have some free resources for you right there on the Facebook page. Remember, you're not alone. Let's do this together. Join DEO's Growth Secrets Group on Facebook. And until next time, keep smiling.