I have often heard prospective all tissue laser dentists say "I can't afford to purchase a laser right now" or "the cost is too high". Thirty-five years of private practice, practice management consulting, and laser training has taught me that there are huge differences between "cost" and "investment" when you are evaluating the purchase of dental equipment.

A good example of "cost" is your purchase of a car. Your profession is Dentistry, so a car isn't going to create a new income center in your practice. It isn't a tool that will create any profit or "return" on the investment you have made to acquire the car. It won't enhance your practice, get patients to refer their friends or family to you, save you time, or allow you to treat new diseases and bill new insurance codes. There is no profit or "return" on the amount you pay for the car. Therefore, your purchase of a car is "cost" and you should pay only what "cost" you can afford given your current income.

Now let's explore the concept of "investment". An investment is something you consider making in your practice that has the potential to make you a profit, or a "return". A good example of an "investment" is the acquisition of a Lares PowerLase^® AT all tissue laser for your practice. For investments, you always want to estimate the "return" you will make on your investment in order to evaluate the attractiveness of that investment. When you attended the Lares Research national seminar series "REIGNITE YOUR PRACTICE INCOME GROWTH" you estimated the "return" you could get with a Lares PowerLase^® AT by treating patients you currently refer to specialists. The "return" was in the form of increased practice billings and it was an estimate unique to the demographics and nature of your practice.

To evaluate whether an investment is attractive, it's good to look at three simple things: Return On Investment (ROI), Payback Period and Cash Flow.

First, let's make some assumptions for our investment evaluation. Most dentists that attend the Lares seminar estimate their monthly billings will go up by at least $6,000 per month (and many estimate far more!) as a result of acquiring the Lares PowerLase^® AT and reducing/eliminating many referrals. Next, the typical finance payment for the PowerLase AT laser and training package is about $1,400 per month. Finally, the total investment to acquire the PowerLase^® AT is $68,900 including the training package. With these numbers we can now evaluate this investment opportunity.

To calculate Return On Investment (ROI), we first multiply our increase in monthly practice billings of $6,000 per month times 12 to get an annual "return" of $72,000 per year. Then, to calculate our ROI we divide $72,000 (our annual "return") by our initial "investment" of $68,900, then multiply by 100 to express in percentage terms. The result is an ROI of 104%. This is an outstanding ROI and dwarfs the 10-12% we all hope to average in our retirement investments over the long term!

Next, let's calculate the Payback Period. The Payback Period measures how long, in months, before the "return" on your investment has paid you back for the entire investment. The shorter the better, since the risk of the investment is reduced the faster you recover all your money. Since we already determined our "return" for this example is $6,000 per month, and our initial investment is $68,900, then our payback period is $6,000 divided by $68,900 equals 11.5 months.

In simple terms this means that we will have made enough new practice revenue in 11.5 months to pay off the entire laser investment. That is a fantastically short Payback Period!

Finally, let's calculate the Cash Flow on our laser investment. The Cash Flow analysis identifies what the impact of our laser investment will be on our working capital and our ability to pay our bills (such as payroll, etc..). We recall that our new practice revenue is $6,000 per month. Most dentists finance the purchase of the PowerLase^® AT and our monthly payment for the laser would be about $1,400/month. Therefore, our net monthly cash flow is $6,000 per month minus $1,400 per month for the payment equals an increase in cash flow of $4,600 per month, or if we multiply by 12, $55,200 per year. So, as a result of our laser investment we will have $55,200 more cash flow per year available to pay bills or increase our take home income!

As we have shown in our examples, there is a big difference between "cost" and an "investment". We have used three simple investment criteria to evaluate an investment in a Lares PowerLase^® AT laser and training package and our evaluation shows this investment to be very, very attractive financially. Instead of thinking to yourself "I can't afford it" you should probably be thinking "I can't afford not to make this investment!"

As you ponder an acquisition of a PowerLase^® AT you will now think about the attractiveness of an investment in yourself and your practice that will increase your cash flow by $55,200 each year or more and will pay for itself in less than 12 months. Your Lares Laser Specialist is ready to help you get started. Call him or her today!

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