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My Views on EBIDTA  

I’m of the firm belief that using EBIDTA to measure the growth of your dental practice is an essential measurement for its health and success. You never want to overlook the amount of debt you’re taking on and how that is impacting your business. And you don’t want to use EBIDTA as your only measurement of growth. But it is an effective tool if you use it to increase your cost conserving measures and pay attention to your expenses and investments.   

In the short video below, I discuss the importance of increasing your EBIDTA and two methods for increasing it. Not everyone uses this method of measurement in their practice, and I think that is a mistake. If you use it strategically to do monthly deep dives into your must-haves and nice-to-haves, you can get a very good idea of how effective your cost-cutting measures are month over month.  

What is EBIDTA? 

So, what is EBIDTA?  Basically, it’s a way to measure your practice’s overall financial performance by stripping out interest, taxes, depreciation, and amortization –  

Use EBITDA in your Dental Practice
How Dental Practices Can Increase Their EBITDA and Why You Should Care: 1 Way to Scale 2

Check out this article on Medium for a more broad context and understanding of EBITDA and how it generally works in business.

Strip out all these other factors and you will have a basic view of your dental practice’s profitability. In my mind, this is an important measurement because it helps you see gauge which cost-cutting measures you take are working. Also, when you strip out all the other numbers, you can focus on the essentials: your operating profitability and your cash flow.  

This is by no means the only way you should measure the success and profitability of your dental practice. You still need to take into account the other factors, but this is another great tool for your entrepreneurial toolbox.  

Increase EBITDA in Your Dental Practice

Why Should Dental Practices Increase Their EBIDTA Margin?  

First, what does increasing your EBIDTA margin mean? Sounds complicated but it simply means lowering your operating expenses in relation to your total revenue. The margin is the percentage of expenses to revenue. So, increasing your monthly EBIDTA margin by 10% means you’re lowering operating expenses or increasing your topline revenue by 10% of your revenue. 

It’s incredibly important for dental practices to be mindful of their operating costs in relation to their revenue. There will be times when your investments far exceed your revenue, but this is the exception rather than the rule. Buying a new piece of digital dental equipment that will increase the value of your offerings, or building out a new software system are essential to practices staying relevant and efficient, but these expenses should be taken in moderation at strategic times.  

Two Methods for Increasing EBIDTA in Your Dental Practice 

When I work with dental entrepreneurs, I like to show them two ways of increasing EBIDTA. These two methods are customized for dental practices and the unique challenges they face in an industry with quite large expenses and investments, especially at the outset of a business venture.  

Learn and Earn –

Deep-Dive Accounting –

These two methods increase your operating profit and your EBIDTA margin and that is an attractive measure for you as a dental entrepreneur and anyone looking to invest in your company.  

Another Tool for Growth in Your Dental Practice 

Measuring EBIDTA isn’t the only measure to look at or use, but it is an important tool for your entrepreneurial toolbox. Measuring EBIDTA and increasing your EBIDTA margin allows you to see your dental practice’s profitability from another angle; it helps you know where your expense management strategies are working; and it allows you to increase your investment in you, your practice, your team, and the community you serve.  

I believe to my core that the future of dentistry belongs with dentists. And using EBIDTA is one more strategy to keeping that future strong.  

I’ve got another tool for increasing growth, revenue and overall understanding of your business and staying accountable to the health and growth of your organization. I run a virtual mastermind exclusively for dentists and dental practice owners and we’d love to see you at the next one!

A mastermind is a small group of peers who come together to share resources, bust down and remove obstacles together, in their businesses, and find inspiration, ideas and growth opportunities. Read more about what a successful mastermind is here. Click the registration button below to sign up for our next one and be a part of something unique, effective and exclusively for dentists and dental practice owners. We want you.