Why Every Dentist Needs to Know Their Practice's BAM

Beyond Bitewings

In this episode of Beyond Bitewings, hosts Robert and Ash discuss the essential financial concept of BAM, or the Basic Amount of Money needed to operate a dental practice. This isn't just another metric like production per hour; BAM is crucial for ensuring that a practice is financially healthy and meeting all its obligations. Unlike a simple break-even point, BAM includes not only overhead costs but also salaries, loan repayments, and even the financial goals of the practice owner, such as retirement contributions. The episode emphasizes how understanding and setting an accurate BAM figure can also play a role in establishing a fair bonus system for practice staff, aligning financial goals across the team.

Robert and Ash explore the components that make up the BAM, including considerations for future expenses such as new hires, potential rent increases, and loan payments. They also discuss the importance of setting realistic and achievable financial goals, which take into account both historical financial data and future projections. The conversation highlights that calculating BAM annually is a best practice to accommodate changes like market growth and inflation. Lastly, they touch on personal financial goals—like charitable contributions or income for family members—and whether they should be factored into BAM calculations.

Key Topics Discussed:

• Definition and importance of BAM (Basic Amount of Money)
• The difference between BAM and break-even
• BAM's significance in establishing staff bonuses
• Considerations for calculating BAM, including future expenses
• Ensuring BAM is realistic and achievable
• Impact of loan payments, rent, and retirement contributions on BAM
• Personal financial goals in BAM calculations
• Annual recalculation and projection adjustments for BAM