Creating a basic financial contingency plan for your dental practice

What happens if one day you can’t come into work. On the grand scheme of things, one day does not seem like a long time but it adds up. Just because you are not able to be there doesn’t mean there aren’t bills to pay, a clinic to run and staff who rely on their cheques.

Contingency planning is not the most popular topic to talk about, but it’s incredibly important. Maybe it’s a car accident, a prolonged sickness or a last-minute family emergency and you are not able to be there. It happens, and thankfully we have basic financial contingency planning to cover it.


Your basic financial contingency plan for your dental office should consist of a savings account with at least 4 months of your expenses saved up. To estimate this, add up all your fixed costs (i.e. rent, utilities, etc.) and an average of your variable costs over the last 4 months. If your monthly costs are $45,000, then a financial contingency savings account should be between $140,000 and $180,000


The second thing you need to think about is insurance. Both life insurance and disability insurance will be important should the situation arise. In fact, don’t discount disability and critical illness insurance. Chances are higher that you will be impacted by a disability or critical illness and require access to those policies, rather than their life insurance policies. And it is important to also have coverage for your spouse, in the event that your spouse becomes ill your working capacity will likely be reduced.

You might also consider term insurance as an affordable option to cover short term liabilities, while whole life insurance can be utilized as a tax efficient investment inside your corporation. It’s also important that you know your other insurance policies for your dental practice. If your office floods it is important to know ahead of time if your policy covers it (and if it does not, do you need it to) and if you have enough cash to cover the cost while you await for the settlement to pay out. And finally your practice will require business overhead insurance for things like your staff, lease and equipment.

We recommend you work with a financial planner or wealth advisor to come up with a holistic financial plan for your business and personally. Your advisor should be a good fit for you and your business, you’ll want to interview a number of advisors to find out their investment philosophy is, what services they provide and at what cost. Once you hire an advisor, you want to connect them to the rest of your professional team to ensure that they are all working together to support you in reaching your goals.

Documenting your processes

Is it possible for your business to run without you? Of course you are a critical part of the process, but it is important that you set up your dental practice well enough that someone can walk in and take your place if need be. This means you need to have your processes documented well. You can watch one of our recent videos to learn in more detail about how to document your processes effectively (click the link to watch it now).

While your financial contingency plan is a worst-case scenario deal, it is important you have it in place to secure the survival of your dental practice should you not be able to tend to it yourself.


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