Dentistry Uncensored with Howard Farran
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1346 Financial Clarity with Justin Krane, CFP : Dentistry Uncensored with Howard Farran

1346 Financial Clarity with Justin Krane, CFP : Dentistry Uncensored with Howard Farran

2/3/2020 3:00:00 AM   |   Comments: 0   |   Views: 91
Justin Krane is a Certified Financial Planner ™ professional and Fractional CFO. He is the founder of Krane Financial Solutions, located in Calabasas CA. Justin advises business owners in the dental industry to understand and get clear on the money side of their business. He teaches dentists how to be strategic with their business money so that they can grow their businesses - and build a plan to fund their personal goals. Justin believes that it’s not just about return on investment, but it’s about return on life. Justin works with dentists to create purpose driven financial plans.

VIDEO - DUwHF #1346 - Justin Krane

AUDIO - DUwHF #1346 - Justin Krane

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Howard:  it is just a huge honor for me today to be podcast interviewing Justin Crane CFP for certified financial planner CI ma for certified investment management analyst and he's a fractional CFO for Dennis chief financial officer he's a founder president CEO of Crane financial solutions in Los Angeles located in Calabasas California did I get that right yeah Calabasas Calabasas is that a suburb of San Diego or La, La okay Justin advises business owners of the dental industry to understand and get clear on the money side of their business he teaches Dennis how to be strategic with their business money so they can grow their business and build a plan to fund their personal goals Justin believes that it's not about return on investment but it's about return on life Justin works for Dennis to create purpose-driven financial plans he holds a Bachelor of Arts degree in finance from the University of Colorado Boulder graduated in 1994 prior to founding Crain financial solutions Justin was a VP investments and sales manager at UBS financial services for 12 years in Beverly Hills California Justin received a certified investment management analyst designation from the investment management consultants Association and in conjunction with the Wharton School of Business at the University of Pennsylvania he is married and lives with his wife and three children in Calabasas California he is an accomplished athlete and was a former junior ranked tennis player in Los Angeles he loves to cook travel speak Italian and spend time with his family aged 47 I just got to make sure though I know you're telling him but remember the Aztecs invented found and discovered the tomato and no one in Italy knew what a tomato was till after 1600 no matter what your Italian friends tell you so and then you also I actually called you to be on the show you didn't call me because I was a big fan of your book money you got this easy to implement money strategy so you can take control of your business finances and create your dream life by Justin Crane on Amazon you have three kids I I've written books before I've always said that writing a book is like having a baby I mean it takes nine months to make a baby and to write a book how long did it take you to write the book and congratulations the fact that you only have five star ratings on your book on Amazon all your ratings are five-star but how what was harder to make a baby or that book 

Justin Crane: I'll tell you this I love that you think I'm Italian my like Jewish New York friends with in pets hilarious I am more of a Jewish New York I'm not Italian but I do speak Italian and I love it and I did write this book so how did I write it I didn't even know that I was writing it when I wrote it I wrote like a newsletter like two three times a week and then I did it for about five years and I'm like oh my god I've got a book here because I've got action-packed lessons that apply to business owners all I need to do is  create a way where I can bookend and give some people more plans of action so I work with the publisher and they kind of coached me through it and next thing I know I up a book it's like a Seinfeld or Curb Your Enthusiasm it's a book about nothing there is no Playa zero you can pick up any page with a glass of wine or coffee and read it put it down pick it up blah blah blah did you

Howard:  did you have fun writing it 

Justin Crane: oh my god I had so much fun because half of the stuff in there were from my crazy wild weird experiences everyday life doing my thing a lot of them were with my wife like just really figuring out and seeing crazy funny stuff and it was great I mean I had so much fun writing it now 

Howard: do you have an audio book I do book night yet yeah that's tell you when I put my book up the cells were there okay but all the complaints were it's gotta be audio like there listen to this on I tuned to our YouTube so I sat down just like this read my book five and a half hours put up the audio book for uncomplicated business and it was nine whatever book sells I was doing is scaled a whole log it went up tenfold in fact Amazon has been flirting with closing down their print book division because it just gets smaller every day but if you just sit down and read the book and give them an audiobook it'll take off but you know what um the reason dsos have taken over 20% of Dentistry is because Dentists don't know their numbers I mean it's kind of like you decided to go help lazy people exercise I mean uh you know they're they're not gonna go to the gym they're not gonna learn their numbers they're not gonna eat their broccoli I mean I mean 32 years I've been screaming at him and you walk into any dental office yeah your hygienist just finished the cleaning exam x-rays did you make five dollars and 12 cents or did you lose 12 bucks they have no idea so how do you how do you teach someone who wants to be an artist and do surgery with their hands all day in operatory and they don't know whether and when you say you're a fractional CFO for dentists I mean they know fractional is they they know that was a Sir Isaac Newton and calculus but they don't know what a CFO is yeah

Justin Crane: so the first thing is is how do you take someone that isn't prone to dealing with numbers and money and motivate them to learn more and help them and empower and facilitate them to take ownership of it what I found in working with dentists which by the way I did not intentionally wake up and be like I'm gonna go after dentists like I'm at CFP I manage money and I evolved into being a CFO because I was like  the biggest driver of success for a business owner is how much money they make in their business and how effectively they manage their cash the business success is going to fund someone's personal goals it's not if you cancel Netflix for $13 a month that you're gonna be able to retire it's about what you do with the money in your business and how smart you are with so I was like well what CFPs are looking at the like the business numbers and I looked at my like I was like not a lot or doing it and I was like okay well CPAs and bookkeepers they're not like CPAs are more reactive to money they're doing like how much money did you make and then let's do taxes right and bookkeepers do data entry but who's being proactive with someone's business money especially dentists so I just started doing it and then I looked at I have like a bunch of clients that I'm a CFO for and half of them were dentists so I'm like okay well I'm gonna just work with I'm gonna really try and work with them what I found with dentists is they have like 92 things going on at once and that's a lot of it is with people and it's it's very very hard to keep all of the balls in the air and then feel like you're making progress and momentum and the dentist that I work with a lot of them are like okay dentistry is cool but like I need to take I need to take it down a little bit like I'm ready to either retire or sell or like there's got to be more than just dentistry it's not that they're all miserable but they want to feel and see that they have an exit so an exit Evon involves valuation which involves earnings cash you know EBIT da all that crazy stuff but how do you teach someone to take ownership is it's all about in my opinion like you know that acronym Howard SMART goals like specific measurable action results in timely you've ever heard of that no okay well when people set goals like if you google how to set SMART goals its its goal settings you know specific it's gotta be as if it's like specific goal I get if you're starting a podcast your specific goal is I want to be the number one podcast in dentistry measurable well how are you gonna measure that by the amount of downloads you have action-oriented what are the things that you have to do results what are you going to get in terms of results if you're the number one podcast and timely I want to have this within two years so all of that in my opinion is great and cool but it doesn't mean anything to someone if it doesn't mean anything to someone so what I see is that dentists really just people in general their life and what they want out of their life has to mean something to them why are they doing dentistry why are they trying to save money why are they trying to make money what are they really trying to do and how can they get a return on their life now that's like cool and like it might be hokey too with some people listening but the kind of things that I'm looking for are from  really dentists in or from anyone it's like I want to start a foundation I want to you know spend more time with my family I want to make an impact in dentistry I want to work part time because I love traveling to Italy and staying at a villa and drinking red wine I want to you know whatever is it's got to have meaning so I can get these dentists to establish meaning about what they want for their life and teach them that their business success is gonna fund their true life personal goals they're gonna take more ownership of dealing with the numbers because if they don't deal with the numbers the numbers are gonna deal with them and they're not gonna be able to get to do what they want in life and that is not good 

Howard: okay bring us up to speed on what you're actually doing because you're through in Calabasas oh that's uh that's right by a thousand oh that's by Malibu Simi Valley Los Angeles Santa Clara I mean so you're in that that major I mean that when you look at you now a population for like like Bostin to Philly's like a 50 million density you're in another one of those 50 million density strips what's the market you've been in dentistry how long you been at dentistry um like

Justin Crane:  only five years not 50 years I mean I've been in business 25 years but I've worked with dentists for five is it moat are

Howard:  you mostly what's dentistry look like down there and southern County not that's the most brutally competitive state they got six dental schools they got a healthy flow of dentists immigrating from I think there's dentists practicing there from what 68 different countries what is the dental industry look like down there 

Justin Crane: what I see are a lot of solo guys and gals that are doing let's say a million to three million in sales a lot of them are trying to bring on associates and figure that out a lot of them are trying to figure out what are they going to sell to an associate or they gonna sell to a DSO it's getting more competitive and they're having to work harder for the same buck and they feel like their business is struggling it really isn't they just feel like it's just it's a little bit more intense there's a little bit more competition and they're like okay I gotta make some hay while the Sun shines so it's good like business is good and there's always seasonality but I don't know I mean I think it's a good market and the thing that they have going for them is is really the cash coat cash cow of of hygiene

Howard:  so why did you get into dentistry five years ago what was going on in dentistry we thought III want to go into dentistry

Justin Crane:  I took a look at my own business and I was like okay what are the problems that they have who are the clients that I have were I'm a fractional CFO for when a fair amount of that and we're dentists so instead of going a mile wide and an inch deep I went you know more of an inch wide and a mile deep and really immerse myself in learning as much as I can from dentists going to listening to podcasts going to conferences reading you know and just learning and I just decided to run with it 

Howard: so you were a fractional CFO and then five years ago you're always you had a lot of clients that were Dennis so you decided to go into dentistry is that am i hearing that right 

Justin Crane: yeah so I started out and I am still a CFP a financial adviser investing my clients money in mutual funds I arrays 401ks and all that kind of stuff that's how I started and then about 12 years ago I made the decision to become a fractional CFO and help business owners manage and get clear on their money seven years later which is five years ago I realized that half of these people were in the dental space so why don't I continue to focus in dentistry

Howard:  okay so a quarter of my listeners are still in dental kindergarten school and they have no idea what a fractional CFO is so let's start there yeah

Justin Crane:  so a fractional CFO is a CFO that works for you for a fraction of their time so a CFO is someone that's like a salaried employee for your business a fractional CFO is a 1099 independent contractor that comes in and helps you with your business money when you need them you might talk to them once a week once a month they look at your books like QuickBooks they look at your P&L; balance sheet and statement of cash flows and they can also help you with all of the other numbers that go into that like I'm sure a lot of your listeners and you know like a dental Intel so you can take a look at a lot of numbers from dental Intel and analyze those and then bring them in and see how they interact with your business numbers QuickBooks and profits loss and stuff like that 

Howard: well let's just you said it first not me so you walked into that glass door dental in tele mental that yeah like I like it

Justin Crane:  I think anything that helps dentists understand what's behind their numbers whether it's let me just keep it simple like how many new patients are you bringing in you know how many patients have not been called back for an appointment what percent of your patients are on a hygiene plan you know what's your profitability or production per day I mean all of those things whether it's dental Intel dent ryx or you know any of them I'm a fan of data and then understanding the data so that we don't guess with our money 

Howard: do you recommend any of those dental dashboards to your clients 

Justin Crane: yeah I mean I think they're all good I also I create some of my own just some of my own KPIs key performance indicators with dentists to help them track certain things like so let's say I have a client of mine that has an associate but he feels like his referral sources are aging and he wants to get more referrals so maybe what he needs to do is do more in marketing so I'll track a few line items that go into marketing and we'll look at kpi's like how many lunches is he having or she having with you know referral sources should they be spending money and bringing in someone on staff to help them with marketing yeah stuff like that so I like data and I like measuring it based on where the dentist is in relation to what they're trying to accomplish

Howard: um my so here's my sir I'm gonna rant just for one second real quick but to me this goes back to 1987 when I opened up my practice I bought my Intel and it was to 87 to 86 do you remember the to 86 sure you argue that old how old are you I was born in 72 I was 15 at the time but I remember that computer oh my gosh so you want to hear how dumb I was the guy that sold it to me which is um oh my god what's his name it's a SUSE at a Nebraska what was his name Gary SUSE at a Nebraska he told me he goes and he believed he wasn't buying him he said well you know it said then everybody's got that Intel 286 but they're coming out with a 386 it'll cost you more but you get that 386 you'll never have to upgrade your computer again I mean it's the strongest computer ever built I mean the Pentium was 10 times stronger than that thing remember the Pentium when it came out that was up but anyway I'm the dentist they there they would buy dendrix or eagle soft and they would do their accounting on quicken or QuickBooks Pro and those were two separate entities and just because of that bipolar schizophrenia right-brain left-brain whatever you want to call it to this day no Dentist ever knows their numbers you talk about these you talk about these dashboards where they're pulling numbers then from your den tricks your Eagle soft your open dental and your QuickBooks accounting you're trying to give them a package but  even that it's not it's not seamless and then and then they argue with dental insurance companies about every stupid thing other than the only thing you need which is your number one cost is labor everyone that comes in with insurance I got a paid labor to call Delta to verify that that yes indeed this person sitting in front of me Justin crane does have dental insurance and then they got 20 different plans and Justin Crane is on plan number three so that's all massively expensive for Delta and me and then when they go to pay you know if I'm not in a if I'm on there in network they'll send me the check if they're not in network they sent it to the patient which the patient so you know the 80/20 role 20 percent are gonna go cash it and I'm out and doing math and you'll never see the number again and when we they should be sending that paycheck through my open dental so no human has to enter it at 20 dollars an hour plus medical benefits only works 32 hours a week and is not there 91 or 81 percent of the hundred sixty hours a week and then put it in Chase Bank which the reason the only reason I use Chase would Jamie not because I'm in love with Jamie Dimon and I really am I mean he lives and his company like Walt Disney lived at his land but it's because if you use scank of America their online application I mean whenever you use it has errors you have to call support I mean I mean someone in high school would know that the skink of America's Online baking was designed by a drunk person so so when you know they're never they think Delta open dental quickbooks online could make this perfect thirty two years later they haven't made a dent in it meanwhile the DSOs era management like me who can hire a bookkeeper in a marketing and HR and a full-time lawyer and all that stuff they've taken over twenty percent of the market and in twenty more years they will take over half the market just because of the fractional CEO just because dendrix and Egosoft don't hook up with just because of the financials is going to be why dsos take over the whole urban world and private practice will only exist in the rural illiquid assets and it used to piss me off but now that i'm 57 is like it is what it is you know i mean it just is what it is that they're never gonna do it I've told him for 32 years they wouldn't print my  columns in there and their magazines because they were too controversial so I started my own damn magazine and told him myself since 1994 every month they don't they don't even care so why so I'm asking you Justin why did you go into this business when these dentists they don't even care in fact they'll tell you now don't ryx is good den tricks is good your mom hit you with a baseball bat right upside the head I mean did you fall down a stairway I  don't know I mean I wouldn't walk into an obesity contest and say I want to be a personal trainer you know did you do that on the site you go into a hotdog eating contest and tell them that you're a personal trainer on weekends so how'd it how are you getting this dentist to address what is already killed him I mean I mean finance to dentistry is just like a meteorite to dinosaurs I mean I mean the dinosaurs were killed by a financial meteorite that landed upside their head and they never saw it coming and I don't think the dentist's will ever see it coming 

Justin Crane: I love what you had to say about the overwhelm about software dentistry dso's where the industry is going what I think the issue is with these dentists is they feel the ones that I work with that financially they're not where they want to be they want to have more money in their bank account their mortgage paid off they want to work towards financial freedom but they feel stuck and it's like same thing new day they know that they need to do something different and they want to feel like they're taking more control of their finances the ones that you're saying that don't care and could give to you know what's about Eagle soft or QuickBooks or whatever and don't want to take control of their money and plan I'm not working with those people I'm not gonna try to convince someone to take more controlling to care about their financial situation if they don't even care about it how am I supposed to help them so I'm only going in working with the clients that really want to improve their financial life and yes they're overwhelmed with all this software I mean it's insane and so I'm trying I'm trying to I have I figure out a way to just keep it very very simple for them to make them feel like it's not all on them financially and to give them very simple things that they need to do action steps and then just clarity on some numbers to where they feel like they're not too overwhelmed to where they just want to give up 

Howard: okay so tell me out this works okay do all your clients have the same software I mean do you wanna take clients that have Dentrix or Egalsoft or do you do tech I don't care I don't care what software they know you're agnostic yeah I one did you tell your Italian mother you're agnostic but this does this go over did she throw a tomato or a potato at you when you told her you're narsing okay what about what about the accounting do you do they have to be on QuickBooks Pro QuickBooks Online good but what about accounting software

Justin Crane: um yes I need I need this I need a clean set of books I prefer QuickBooks there are some other ones like zero and QuickBooks has many properties again QuickBooks they sold off quicken they got QuickBooks Online which quicken do you recommend our mandate I love QuickBooks Online that way I can have my own username and password log on to their books whenever online it's held in the cloud QuickBooks desktop I have to remote in by a server or a password and use something like TeamViewer or log me in and log in and like every month there's a there's a new security update or a new password or something it takes a little bit of time but it's doable I like QuickBooks Online I prefer QuickBooks just in general but I like online I don't care about all the other software but the other thing that I need is a good bookkeeper I'm not the one doing the books the dentist has got to have a good bookkeeper who can get their books done within like let's say ten days of the prior month so we can look and see how things have happened and measure the results against projections or whatever we budgeted for  

Howard: and it's so sad because they think they're doing good accounting so they pay for this heavy duty CPA and he doesn't make him a statement of cash flow he's just doing their tax accounting and he's charging the ton of numbers and  all it is is a third person accounting for the IRS like if you're a publicly traded B for the SEC and those are the guys who know no managerial accounting so then you got the other dentist who's smart and he doesn't have that big expensive CPA he gets a he gets that $12 an hour bookkeeper to come in his dental office and do all the paying the bills and that dentist always knows his numbers twice as good does the guy prepare them for the IRS that's just another reason I hate the IRS and tax so you don't want QuickBooks desktop you want QuickBooks Online yeah okay the next question he's gonna ask is what about payroll did the does this include payroll or do you do payroll or is this something their bookkeeper should do the payroll is 

Justin Crane: so I do not do that like I'm a financial advisor I'm not like they're glorified assistant I'm not gonna do data entry nor run their payroll an employee of theirs is gonna run their payroll most of the time sometimes the CPAs will do it but usually it's an employee or a front office admin or something like that they'll run their payroll is there any if

Howard:  she's working right now for somebody else she got out of school four years ago she's gonna buy our own practice is there any practice run a software that you work with that you like more than others are you agnostic to all the software's or some better you know I'm it there's not one that I hate or one that I love I just won't ever seen ventric soar eagle soft yeah I hate them I hate them so bad I flew to Effingham to chew the guy out twice for eagle soft and  in fact the founder that went on later to Patterson dental he was CEO Patterson and then the and then then this brother is runs the for Heartland in the same town and went up to Provo Utah I mean the they're so bad they're so bad

Justin Crane: that's what the dental Intel's in the practice by numbers and all those that's why they've been created because yes the reports from dendrix and Egosoft are not as great but not as great you're just 

Howard: what are you their PR agency all those does all those all those dashboards they're all created by their XO employees in Provo Utah that lived down the street from done tricks yeah I mean dendrix is so bad they've spun off like ten other different companies just from their own employees saying are those guys insane and the answer is yes they are but anyway but the correct answer was open dental I think is better just cuz it's open yeah I mean you can hire your cousin Eddie to program something to open dental because it's open den tricks builds firewalls on stuff okay so so quickbooks online you're agnostic to practice manager software are there you you mention key performance indicators KPIs or their I mean there's a lot of keep users practice production there's collection there's profit there's currently active patients currently scheduled there's overhead there's production per patient there's production per new patient there's case acceptance there's number of new patients patient attrition staff labor what would key performance indicators do you think are significant that you look at 

Justin Crane: I love all those but I go with just a few just if I'm gonna just keep it very very simple for everyone the first thing is is collections so that's gonna be sales the next one okay but but bit members 

Howard: I'm sorry I gotta go slow but a quarter my viewers are still in dental kindergartens they got to know the difference in us a noun and a synonym and an anthem yeah okay so would you so is what would be the fundamental ward is it sales is it revenue is a collection okay what so

Justin Crane: so financials yeah if you're looking at financial statements right like a profit and loss statement it would be sales so what are the things that why are you cussing on my show you can't say sales in dentistry my god they they're not salesmen they're gonna sell dentistry you just called them all anyway so so sells sales would be the main word and what would be the most weighted cinnamon what synonym would it be revenue it would be it would be no no it would be collection against the production so what's your collection so if your production is ten thousand dollars and you collect nine thousand the collection would be nine grand which would show up on the sales on the piano so it depends though I'm talking to it's the same thing but I want to see how much money is going into the owners bank account okay 

Howard: so your number one key performance indicator is sales

Justin Crane: I don't have a number one I have like three to five that I'm constantly looking at okay so I'm not Sarah mo is net profit that's money comes in that sales and then you have expenses things that you pay money for 

Howard: yeah but but with you you can't say profit because if they're members of the a DA the a DA is their profit PR OPH et it's a religion thing and when you say net profit they I mean you talk about a religious profit at the American Dental Association or net income profit on a P&L; 

Justin Crane: I'm talking about net income 

Howard: okay so that's profit without a Phe T okay well yeah just lost all my viewers know there now they just switched over to the Joe Rogan podcast but anyway okay so net profit yes and then 

Justin Crane: another one is cash how much money do you have in the bank Wow I was not expecting you to say that like literally it's one of the biggest problems that dentists have is managing their cash but you know why the ego

Howard:  you know why because you get a statement of income which is the only one their CPA gives them because that's what the third-party tax collector IRS once they've never been given a statement of cash flow and they only get a balance sheet when it's time for a divorce and they have to split up all the assets so they've never been given a statement of cash flow and if you don't know what a statement of cash flow is and you've used your same CPA for ten years fire him right now and call Justin crane what's your what's your number to call Justin three ten two three seven six four nine one okay wait I don't even have that number um okay say that number again three ten two three seven two three seven six four nine one six or nine one so let me tell you this I have no connection with Justin crane he's not gonna give me a dime I you know nothing there and there's only three accounting statements since the beginning of time and they're a P&L; a statement of income profit loss which is the only one your CPA gives you there's a statement of cash flow and then there's a balance see what balances your asset balances with what you owe on it your life and you're a - sure your equity and you've been using the same guy for 10 years you know none of your numbers it's all hell's broken loose but you keep them just because you're a nice monkey and he's a nice guy and you go eat a sandwich once a year no fires ass because you're giving them money for a decade you don't know what a statement and cash tool is and now it's so bad that DSOs have taken over twenty percent of the market and this guy is the first guy I've ever heard that added cash as the key performance indicator and you would only add that if your clients were just like from a religious institution following dental profits with a PR OPH ET okay so we got sales net profit cash what are the other two 

Justin Crane: well okay so I have a comment and what you said will come back to in a minute but another one that I like is labor compared to net collection so labor is one of the biggest expenses for a dentist so we need to track labor compared to net collections 

Howard: okay just be easier just to say revenue per person just total collection divided by number of employees I mean a lot of the Fortune five Energy says person 

Justin Crane: you can do it that way or you can flip-flop it and be you know cost of labor divided by your net collections you can do it that way or that's how do you do it how do you do it cost of labor divided by divided by net collections and that could be anywhere depending on you know twenty to forty percent it could be you know it's it's gonna usually fall in that range but that's one of the biggest expenses for a dentist you know and there's a few others but like you're always gonna have a rent payment you're always gonna have to buy supplies but that one thing that labor is a biggie it's the biggest isn't it it's

Howard:  uh yeah I mean after you get done paying labor I mean when I see these people that are locking up the thermostat it's like you know after I pay payroll I don't give a what the electric bill is you know it's and then you got you know we've got some poor old obese woman trying to turn the air conditioner up real high then you got some skinny anorexic in the back turning it down and it's like that that's that's not your problem your problem is labor and and I'll tell you another thing I am statistics it's not just about your sample size it's how you pull your Cystic well I have randomly walked in a thousand dental office in my lifetime like every time I'm out shopping every time I'm on vacation I see a dental office I walk right in the front door and  I I'm usually back shaking the hands with the dentist before the receptionist is trying to figure out what they'll happen and 80% of the time they're always in their private office it's like the hygienist is doing the 80 dollar cleaning while you pay her 40 dollars an hour the assistants make packing cord and you're back in the room for like 15 minutes like dude I could have packed the quarter in a minute you schedule them an hour and a half because 15 minutes of it you're delegating her packing court so the dentist isn't focused on revenue per person because they're always sitting in their private office at all times while they're delegating and maybe if they saw the revenue per person they'd realize there's a lot of dentists that don't need that many employees 

Justin Crane: that's why there are so many dental consultants that cochon leadership communication systems and efficiency those things I don't even get into but there's so many consultants that that coach can teach on that because of what you're just describing 

Howard: yeah you know one way to get your overhead down it's just to start working and and then and then they're always waiting on an OP and I'm like well your private office should be a nob like well this is my private office like well me and Superman we work out of a phone booth we don't you know we don't need a damn I mean what do you need your private office takes put a bed in there I mean it's crazy and they're always waiting on operatory operatories not their car and they're over there always sitting now I said why do you say no well you know Cynthia is packing cord well dude I could have packed it a 0 and a 1 chord in a minute each and  you took off your gloves and your mask and you walked back here and you may oh my god just  try working so revenue per person or cost of labor divided by net collections sales net profit cash what was

Justin Crane: the fifth one the fifth one has to do with their personal situation in other words what are they trying to do to work towards their financial future which could be retirement which could be anything in their financial future whatever that one thing is that they feel and it might not just be one thing but I'll put it as either their net worth I'm just trying to keep it simple in other words the net worth of a dentist is gonna pick up what they think their practice is worth and what their personal assets are and after the second and

Howard:  let's keeping it real the only dentists that retire by 65 never divorced and after one divorce you're gonna be at least in your low 70s and after two divorces you will die at the chair in the operatory I love it did I get it right you got it right I get a free bottle of wine so you know you ain't worth it I just you know anywhere it's too expensive so anyway um so revenue per person which is cost of labor divided by net collections lots of companies do that sales net profit cash and net worth of a dentist 

Justin Crane: yeah net worth I mean I everyone is gonna be different like one of my clients his goal might be to pay down his mortgage so we're gonna look at his mortgage every year a little bit mortgage of the house one of them might want to sell the business in four years so we're gonna look at something called EBIT da which is like net income and we add back a few things call it valuation of the business it really depends on where the dentist is trying to go but or maybe it's how much money is in the 529 accounts for their kids maybe it's you know how much money they need yeah you know

Howard:  I want to take argument of that when I was in college there's only one thing I learned in college and that was if daddy paid for everything you were on the varsity drinking team and when you were taking out student loans you were you were burning the midnight oil and then I asked all these there's  a thread on dental town I wish you would post on so bad oh my god I wish you would post on this thread it's on so the whole town has 50 categories root canals fillings crowns whatever and we have one of them's financial and the financial thread is probably behind route cows and implants it's probably the biggest one and so we have accounting bookkeeping the dental stocks we have equipment acquisition patient finance plans personal finance taxes and real estate investments and the biggest threads we have in all of dentistry are on under finance like making money on my credit card that has 70,000 views retiring how much I need for retire financial advice for young dentists income level expectations moving student let student loan debt over to business dad I'm how much money do you save for your kids college I put on there and say you know it's funny how many you ask the damn question your daddy pay for your college no of course not that's why you're a million-dollar dentist if your daddy paid for college you'd be a surfer right now in San Diego does your does your spouse know what to do if you die I get that phone call I don't know every three to four months some somebody will call me up and say my husband's a dentist and he died and  just completely clueless but I wish today there was one dad died he got a big old chunk of money says where to put a significant sum of money these are all questions posted today how did you acquire do you recommend a rental property over the stock market the get out of debt threat and that was what brought me on that deal to get out of debt thread do you see I've always thought money was a very emotional subject you know main and it's they don't really talk about it analytically it's almost like it's an insult like of you  know but anyway do you think that get out of debt thread do you think that's a good business decision do you think it's more emotional and how do you sell it how do you separate that's great financial common sense versus just some emotional thing you're trying to pay off your  student loan debt but you really should buy an x-ray machine I mean we got 10 people in here each day that could need a pan oh and you're and you're taking your money to pay off your student loan so how do you separate that financial versus emotional 

Justin Crane: well I think a lot of decisions Howard are made emotionally and then we try to justify them with logic so in that that I mean everyone is like that to a certain extent my first thing with debt is is if you feel like let's put student loans aside and let's just talk about like the business debt if you feel like you can borrow money and you're borrowing money for a specific period of time and you think you can when you borrow that money you can go and invest it or do something with it and you will make more money off of what you do with it over and above the interest you have to pay then and it's a good thing to do a simple example borrowing money from the bank to buy out your partner if the interest and the principal payment just the interest let's just say if the interest against what you think you're gonna make on the increase in collections from now running your own show then it's a great idea to do something like that of course everyone's thing is different but I'm trying to make the point of I would only borrow money as a business owner if I have a dedicated stream of money coming back to pay off the debt I wouldn't borrow money if I'm just flailing with my numbers and I have no idea what I'm supposed to do with it like I'm not gonna like people going shark tank to borrow money because they're not they don't have a good business model and they need money for a loan so I like borrowing money for a specific reason knowing that there was a stream of revenue to pay it back

Howard:  and what is the guy just has today he says our financial planners worth it now do you consider yourself a financial planner yeah that's my core business I'm a CFP 100 % well you're a certified financial planner but you're also a SEMA which is a certified investment manager analysis and then you're a fractional CFO yeah this is its I just evolved my career I'm always a financial planner that's my core business I just realized that a lot of business owners don't understand their numbers

Howard:  okay so this guy posted this today and it's already got 50 replies I wish you would chime in here he says our financial planners worth it hi everyone I need a little advice here I'm 27 years old new dentists and feel a little overwhelmed about large expenses I have to make in the not-too-distant future wedding practice purchase house purchase okay just cancel the damn wedding and I have no idea about how best to navigate myself through these things in the most efficient way possible is a financial planner worth it to help guide me what have your experience has been using finding a financial planner what exactly should I be looking for thank you I wish you would log on here and answer this but anyway 

Justin Crane: so it's like you know if you go to a Chinese restaurant and you like have a terrible experience and you're like okay I'm done I'm no longer eating Chinese food you're gonna have a bad rap on Chinese food so when someone hires a financial planner and they don't have a good experience with it or they invest in the stock market and they get killed their frame of reference is what recently happened and they'll think oh if this happened with this guy or this Chinese restaurant or this stock market where my dad got killed in the market they're not going to invest in that so it really depends on who you're working with of course anyone giving advice if they're good you should consider hiring them and working with them I mean I think that consulting and advisory business for really anything is great if the person that is working you know with you and giving you advice has your best interests at heart is smart knowledgeable and it's clear on what they're gonna provide for you and how they're gonna get paid the reason why financial advisors have such a bad rap is that many of them are held to what's called a lower standard called the suitability standard where they have to recommend suitable things for you they can work on Commission they legally don't have to have your interest first and they can kind of just go by their merry way and that's  really not the best way to work with a financial advisor the better way is to work with someone that's a fiduciary legally they have to put your interests first it's in writing they don't work on Commission the only one that's paying them is you and they're held to this higher standard that's the way that I work I was the Commission's suitability route for the first half of my career then I bailed on it and dropped all my licenses and now have no Commission licenses at all just the license to give it bikes and to manage money for

Howard:  slow down on the fiduciary part we just had a who's that guy last week tonight John Oliver Sunday night HBO do you ever watch this deal last week nights it's a really great show and he did a whole deal on fiduciaries um he was saying that I'm you got to guide to people from 25 to 65 one guy with a slightly higher Commission at 65 might have $1,000,000 and the guy with the lower Commission might have two million dollars and but it was all focused on a fiduciary well you saw that in the news last year a lot did you know yeah so explain what what that word means and why was it in the news a lot in 2019

Justin Crane: because what it really started with the that a lot of the Wall Street firms were in giving great advice to clients and they lost money at the expense of financial advisors making a lot of money and then from there more legislation passed where they required 401k plans which are subject to ERISA which is a whole  thing to have more transparency this is all about transparency and clarity about what the financial advisor is making and what the user the little guy is paying and as more of that went towards more transparency more disclosure of fees the entire financial planning industry went with it and the fee only guys the fiduciary guys like me embraced it and then the suitability firms like I don't want to name any names but they're out there right like the ones that are helped it that can work on Commission the big Wall Street firms they were I freaked out because they didn't know if they were gonna have to literally shut down entire departments and just be fiduciaries it turns out that they didn't they can have both but the public doesn't even understand what the difference is and I just think it's just in any advisory client relationship the fee needs to be disclosed the advisor needs to be working in the best interest of the client and the client needs to feel that 

Howard: ok when you were talking about your key performance indicator revenue per person cost of labor divided by net collections sales net profit cash net worth of a dentist a lot of them always here EBIT ah even I leave it on earnings before interest taxes depreciation amortization do you are you a biggie but aa guy or not really or well what do you think of uh I mean you see it on every article I mean everybody code 

Justin Crane: yeah that's because of the DSO business of dentistry growing is that if a dentist wants to sell it's all about emid ah and then a multiple of that which they get when they a Mayan EBIT dog I working with clients who were not selling no I'm not into it I don't I don't need to be concerned with that the three financial statements and the other stuff I'm more concerned with but as soon as the dentist is thinking about selling it could be three years from now could be six years from now it could be two whatever then I'm all about that because that's the metric that buyers look at

Howard:  and I know my homies I mean I know I'm well and they always think that they're gonna solve all their problems if I just had ten more new patients a month I'd solve all my problems when you're a fractional CFO Linney's Dennis do you think a large portion of their success is a steady flow of new patients or do you think there's other factors that way and more like you know when you say success do you mean like the success of their business or the success of themselves personally a healthy business its cash flowing there they're always taking in more revenue than their expenses is that what would well let me say it like this here when you because we've got a lot of kids what a fourth up are still in practice they're all under 30 you see here's here I'm working on a hundred dentist and these are the ten most happiest healthiest dentists where you would want to be a patient and here's a ten most miserable son of a bitches that you know this you know they're having tough times what do these guys more likely have going on in their life than these ten is it more new patients is it a better location is it more technology is it that more average right what separates the top 10% from the bottom 10% in your mind 

Justin Crane: really good people that they have on their team really good people and the decision that they're not going to do everything themselves and that they have to delegate and surround themselves with a smart team not to the extent that they're not going to deal with it but they have to have good people if they have good people they're gonna do great 

Howard: nice well said I mean I even named my book uncomplicated business how you managed people time money I mean my god it's that simple and then you look at all the a chart questions on dental town they're like I mean even today should I fire my front desk and then they explained their front desks like dude do I have to fly out there and shoot her myself I mean what does she have to do to get fired I mean what what's the bar I mean right now right now the bar for what you have to do to get fired is basically you just tolerate all behavior what do you um so to give us give us some examples of what you're doing for clients why are dentists hiring you what are you doing for them and by the way I want to tell you guys out there that I'm ministries a small town there's only two hundred eleven thousand Americans alive that have a dental license only 150,000 do general dentistry 30 hours a week or more 30,000 specialists 32 hours a week or more and I want to tell you that staying power is everything in dentistry like a lot of times they'll tell me well I heard about this person or that person but I heard she wasn't any good well how long's she been in dentistry she's been around for five or ten years yeah well you can't stay around 5 or 10 years without pleasing somebody so staying power is huge I'm looking at new restaurants 20 to 40 percent of all new restaurants are bankrupt the first year every year in America the dental and the  restaurant industry loses more money than it earns so you're staying power you're in business why are dentists keeping his client what is it typical average if I got a big McDonald's I get a Big Mac Franco what's your big back fry coke who's eating it and why  are they happy the thing

Justin Crane: I think the reason why they're hiring me is that they  have a decent idea of what they want but they feel like they don't have as much to show for how hard their work so they're paying me not only for advice but once they learn the advice and they're with me for a year or so they're literally paying me to keep them accountable to what it is that they want to do and to do some of the heavy lifting that they have to do it's like you can go to the gym and you know exactly how many pushups It Up's treadmill and squats you need to do and all that but when you're paying a trainer to show up and do it with you or watch you do it you're gonna show up and perform a lot of the dentists they know what they need to do but they're overwhelmed and it's easier to do it with me than on their own and what they see is  they have momentum and growth in there we'll call it their portfolio so I can't guarantee anything but look if they're saving money and putting money away for their future they're gonna feel really good about oh I just closed out the year I was able to put this away and blah blah blah they're gonna have something to show for how hard they're working and imagine if the dentist can't sell their business for what they think then they gotta rely on what they put away for all this time 

Howard: yeah I'll tell you what that hit that one hit below the belt on me I am I hired I I'm smart well you said it personally so I hired the two sweetest nicest most beautiful Ironman women in the world led by me and they trade off days when they boat they always showed up everywhere in my house banging on the front door at 5:00 a.m. and they're just beautiful sweet gorgeous athletes whatever I did the Arizona Ironman three years in a row Wow then I got busy I had to go lecture in Singapore and all these place so I cancelled I said you know I've done every day three years I got to take a break get some of the Iron Man's I've done since I hired my Jane and Wendy yeah yeah I mean I mean it's there they're knocking on your door and I knew it'd be perfect right they were there they lived you know a mile away from my house yeah so you're saying you're almost more of a personal trainer financial adviser

Justin Crane: totally I'm the proactive one like we talked about it but  let me give you a real example so when the dentist grows how do they know that they're setting the right amount aside for taxes so you look at a CPA who's reactive what they're doing is they're doing your prior year's production and collections and profits and giving you a tax return and they're emailing you some like file design and tell you what your estimated tax payments are for the year and all of that but let's say your business gross you can't just make estimated tax payments on what happened last year based on old random assumptions someone needs to email the CPA the P for the first three months and true-up the cash as to what's the dentist's and once the IRS is and like who does that the dentist doesn't do that way too busy the CPA they don't want to be bothered with that they're doing taxes based on last year so in examples I'm emailing the CPA and being like the PL has made this are we on track how much do we need to set aside then I literally go with the dentists I'm like you need to write the check to the IRS now send it or move it over to another account and don't touch it so I'm emailing the CPA the dentist isn't doing anything they're copied on the emails but they feel like someone's doing some of the heavy lifting with them

Howard:  beautiful so you also say that it's not about the return on investment it's about return on life yes what do you mean about what does that mean to you

Justin Crane: so I'm gonna call on the entire financial advising industry we are set up to tell people that they should save  so they can live the life that they want to when they're 92 and they have four billion dollars and I think that's there are gurus out there that will tell people not to go to Starbucks and spend ten dollars in a latte and if they did that and save that money they'd have another four hundred million dollars in blah blah blah I'm not into that I mean to return on life I'm into actually going on that vacation with your family getting that expensive cup of coffee doing things that bring you satisfaction and fulfillment now let me add to this because everyone's like well this guy is a financial advisor like where's the catch here's the deal when we spend money on things that fulfill us we're gonna be more happy and ultimately more productive and then if we can take that money that we're gonna be more productive and profitable with and bank and save some of that via automating money which we haven't talked about but I'm a big fan of automation if we can automate the growth right and what does that mean it means over 20 years we will have enjoyed the coffee and the vacations and still saved but the thing is that people don't know how to do that they think it's all or nothing that's why I like Weight Watchers has been so great because they give you some systems and constraints but you can have chocolate if you're gonna eat carrots for the rest of the day so I don't think it's just about saving for when you're 85 and I only realize this just a few years ago my father passed away and I was like I'm not gonna live forever I need to take my family on this vacation I've got to do it it was a huge child with you know what he was 74 at the time 

Howard: which is the exact 50 percentile he died on the 50-yard line 74 boys 79 girls but what you what I was thinking about that is I'm one of the three Americans will never die from a disease only two out of three die from disease one every die from car wrecks accidents falling off bridges so so if you're never gonna enjoy your life so that you can have it when you're 92

Justin Crane: I mean you might you might not even make it to 92 yeah I mean it's it's things that we don't want to think about but we have to enjoy the ride it's the journey not the destination but like the savers who love saving they need to see that they're okay and that's through financial planning and software the spenders need to see that they're gonna run out of money and they need to do both I just believe that we have to do both and the business model of Wall Street is about delayed gratification and I of course it's important to save compound your money and I believe in that but we also got to spend a little bit of money now to have some fun so when you're dealing with dentists do they tend to be more savers or spenders they tend to be more cash hoarders can take orders orders they like to hoard cash but like you know like to and then they think this is great that real estate is gonna like solve everything right and because they're like Oh real estate passive investing I'm gonna collect rental checks and I'm you know I could be in vacation in Hawaii and do that and yeah that's a great way to build wealth but I just believe that that everyone has to be diversifying and it can't just be one thing so what I'm trying to get dentists to do is automate their investing so that their money is working for them 

Howard: so for yeah so back back back to the real estate thing you know who really knows Dennis love real estate you know he knows it more than anybody on earth grand cardones been on this show - yes he's been on this show twice it when you go to the threads on dental town I mean today look this read about real estate he says um whereas if you type in real estate it's here I'll just type in the search in real estate it's all they talk about real estate all day long yeah I mean my god I say so so so first answer that one question you said a hoard cash real there in the real estate I'm I know that Grant Cardone is come on the show twice because he's I had so many dentists buying duplexes and 16 pluses so what's what's your thoughts on our real estate

Justin Crane: I think it's totally fine as long as the dentist is diversified and they don't have all of their eggs in one asset class the issue with real estate it's about leverage real estate is all about leverage and you know if you're gonna buy an apartment building a house whatever and those tenants can't pay the rent you're on the hook to pay you know the mortgage and all that if you don't have the rental income Doc's so it's just really important that when people invest in real estate they understand that fact I mean it's a simple one everyone knows it but I got to remind them of it and they're great tax advantages it's a great way to invest but it shouldn't be the only thing that people invest in 

Howard: well I wish you would I post that on the  real estate investments right it's like 25 pages long and then there's another question that always gets asked at least once a month they're buying a practice and the owner doc is selling the business and the real estate and it students they can go buy the practice for 750 or they can also spend another 750 buy the land and building what would you what would you say about that one 

Justin Crane: I can't give customized advice but I like the idea of buying the building that you work in the building is usually owned in an LLC your business can pay rent to the LLC get a deduction the LLC gets it pays down the mortgage it's a great thing as long as the numbers work but I've clients that do that I think it's I think it's good all right 

Howard: I am so so again you were talking about Dennis so you said they love to hoard cash that makes me love my homies even more that's just I just think that's cool but you said three times about automating cash savings so talk about that so let's say that

Justin Crane: I don't know here's a simple one that like a dentist needs to put away 50 grand for the retirement account well they should be automating a $4,000 transfer from you know their business account to their 401k I mean that's just that's very simple but that's a way where the every for every month four grand this is hypothetical I'm not telling people to do this $4,000 is automatically transferred from their business checking account to their personal 401k or their SEP IRA or whatever or if they're investing in real estate and they want to pay down that mortgage it's an automatic transfer from their business to personal then from the personal it's going to wherever it needs to go so it emotion and it allows us to be committed to what we want to have to do we might forget we might make the wrong decision but automation removes that 

Howard: so we talked about I'm trying to try to thank everything so we talked about EDA revenue per person sells net profit cash net worth of a dentist staff labor  is their number one largest expense I'm what do you any thoughts on labor

Justin Crane: yeah I mean I think it's super  important and generally where it goes with labor is when I talk to the dentist let's say they have five staff people or ten or whatever there's always one or two or three that they don't like and they're trying to figure out how they can improve their relationship with that person whether they need to keep them or whatever that's when I'll bring in a dental consultant you know to work through that so do I have anything else to add not much just that it's an important metric and we need to make sure that that it's not too high against that collections and 

Howard: how do my homeys contact Justin Crane certified financial planner well I

Justin Crane: they can go to this URL and this URL will give him three things that they need to do that millionaires are doing to get ahead and work towards financial independence they can go to this URL intention money calm intention money intention money let's check that link that link will be up soon we just created a new call to action okay well hey it was an honor that you came on the show today and talked to my homies I thoroughly enjoyed talking to you thank you so much for all that you're doing in dentistry they can also find me on LinkedIn and all the other social media channels I'm out there okay and you also have your other website your crane financial solution yes crane with a KK or any financial solutions well hey thank you so much for coming on the show.

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