Transcript of the Conversation
R.J. Martino:
Welcome to the iProv Made podcast where we teach you how to build a profitable practice. Jordan, how are you?
Jordan Smith:
I’m good. How are you?
R.J. Martino:
Don’t know what episode we’re on, but we’re still early in the podcast. And I’m excited because we’ve got a guy who is a tax expert, an accounting expert and really digs deep into dental practices from a financial perspective.
Jordan Smith:
I mean, the bottom line his average clients and he’ll talk about this. Average clients see over $1 million in revenue. That’s huge. So if you’re there or you’re not there or you want to be there, this is a perfect podcast for you. Jonathan is super smart.
R.J. Martino:
Well, yeah, and the thing that really resonates with me is the idea of it’s one less thing you have to worry about in your business. As business owners, we’re just always thinking about all parts of our business. Unless we’ve got a key partner or a key employee who’s like, I don’t even have to think about that anymore. The problem with accounting and tax and billing is usually people are so siloed that they either do tax, they either do accounting or they only do billing, but they don’t speak for one another. Jonathan is the partner that allows you just to forget about accounting and let you focus on something else. You’re going to put an asterisk by that because he can’t let … He says to build a profitable business, you have to know the financial standing of your business. So I don’t want to give away all of his thunder.
Jordan Smith:
No, no. Without further ado, here’s Jonathan Van Horn with Tooth & Coin.
R.J. Martino:
Welcome to the iProv Made podcast. I am super excited for one of my close friends and one of the smartest people I know, other than you Jordan. Jordan, my great-
Jordan Smith:
Well, no offense. No offense.
R.J. Martino:
My great sidekick but also I’ve got Jonathan Van Horn. Jonathan, thanks so much for being on the podcast with us.
Jordan Smith:
Hey Jonathan.
Jonathan Van Horn:
Hey guys, very happy to be with you. You must not know a whole lot of people if I’m one of the smartest ones [inaudible 00:02:11].
R.J. Martino:
You know often for our audience, for marketing companies like myself, what accountants do seems like black magic, no one really knows how it works. Often we’re running the business like we run a personal checking account which is how much money’s in the bank and I’m sure you’ve got principles against that which I’ll talk about. But I always like kind of starting with our framework on how we think about growing practice and then tell the audience how we think you fit in.
R.J. Martino:
And the first thing is everyone comes to us talking about a symptom. And it’s important that you talk through and identify what symptoms a business having. The second thing is making sure that the person, the practice owner is willing to take extreme ownership of that problem in that they know they have to get involved because you can’t just stomp your feet and demand the world change for you. Then we really triage and we look to make sure they’ve got a vision for the future. And if they don’t, we help them walkthrough with the vision of the future looks like. Once they’ve identified what the future looks like, we build and we ask vendors to help build a strategy and tactics on how to accomplish those goals.
R.J. Martino:
And then we talk about accountability and aligning your team. And how do you get your team on the same page with you all rowing in the same direction? And only after you’ve figured all those things out, then you engage your team. It’s a lot of planning before you kind of get your team involved from our perspective. And I’ve toyed with this idea of the last step being this financial mastery. I got to figure out how financial because I’m a big fan of financials and Jonathan that is your expertise. So why don’t you give a little background, an elevator pitch on what you do at Tooth & Coin?
Jonathan Van Horn:
Sure. So we are a CPA firm that helps dental practice owners. We have a bit of a unique niche in that number one, we’re a CPA firm that only helps the dental practices. And number two, over 75% of our clients were new practice owners whenever they started with our company. So we have a bit of a unique take on the way in which a CPA helps a business owner. A lot of people, to be honest with you, most people that I speak to don’t even know really what a CPA does. As you said, you mentioned the black magic thing. They just kind of know that they’re supposed to have that CPA guy on their board of directors so to speak, but they don’t really understand what that means. So we spend a lot of time educating our clients on the things that they don’t know. So we’ve got about 200 dental practices that we help out across the United States. We have clients in pretty much every state, and we really focus on being an education source for them.
Jonathan Van Horn:
We have a podcast that we have that we’ve put out hundreds of hours of content for people to be able to take in and understand information. I had a lot of different consultants from around the world. Actually one of our first ones was from Australia, one of our first guests. And just to really kind of help them with that getting off the ground and becoming up a practice owner. So I know your audience is a lot of medical professionals that own a small business. And the way I tell most people is that our clients spend about 15,000 hours learning how to become a dentist. And then zero hours learning how to become a business owner. So we have to try and help fill that gap because there’s a lot of people that are …
Jonathan Van Horn:
Our typical client is in the maybe early thirties and mid-thirties, late thirties. And they are just out of dental school or they’re a few years out of dental school and they’ve got two, three, four, $500,000 in student loan debt. They go out and acquire a practice, spend $1 million on that. They probably have a house that they’ve purchased. If they’re lucky, they’re in a place like RJ and I and Jordan where we’re in Little Rock where you can buy a really nice house for 200, 300, $400,000. But you add all those together and they’re almost at $2 million in debt and they’re sitting in a spot where they’ve got the seven to nine employees and are expected to lead this business to be able to pay off all that debt. And we’re there to help them with the … there’s the old story where the business owner has to wear all these different hats.
Jonathan Van Horn:
We’re here to help with the accounting hat and the tax hat. So we want to make sure that our clients understand what’s happening in their business from a financial perspective. So we do the accounting for them and then do what is called management reports, which means that we answer really important questions about what’s happening in their practice over the course of the past month and past few months. We give them more clarity around what’s happening in their practice from a dollars and cents perspective. And then we make sure that they don’t pay too much in taxes. We help align their business with the tax code so that they can minimize their tax burden and keep as much money as they can so that they can get out of that debt problem.
R.J. Martino:
Very neat. Well, I think the audience as they listen to this, that all of that rings true, especially the concept of how much stress and pressure there is on $2 million worth of debt. That the world, the public, the media doesn’t understand that kind, and even the staff doesn’t understand the kind of pressure they’re under. The way they’re thinking about their practice all the time. Even if they’re in the shower, they’re thinking about it. And they don’t get the accolades like they think they deserve. And so all this I think is ringing true for our audience because that’s what we’re hearing all the time. I’d like to kind of for you to think about your most successful clients and I’d like the audience to understand what it was like before you started working with them, and this is your most successful clients, and what their life is like after they work with you.
Jonathan Van Horn:
Yeah, absolutely. So we have a lot of clients that I mentioned we’ve got about 75% of our clients are people that have never had an office before. So what we consider success is whenever we make that transition into ownership as easy as possible from the responsibilities that we have. We actually had two clients this morning that sent emails just thanking us for doing a really good job for them. And this is, we’re recording this on January the 23rd, so it’s not even tax season yet. It’s technically tax season because it’s between January 1 and April 15th. But it’s not really started ramping up yet. But they’re appreciative of us because we make sure that they understand what’s going on in their business and they understand what’s happening from a task perspective and they know that they’re not paying too much in taxes.
Jonathan Van Horn:
So in terms of these client success stories, we’ve had lots of people that once we’ve laid out, here’s really how much money you made in your business last month. It allows them to sit down and set up a structural framework, to pull from a term you’ve already used and said, “Hey, this is where I am and I know I want to get to this point.” And either they will go in and they’ll try and figure out how to set goals around getting to that point. Or they use like we have guides that we send out to say, hey, this is how you read the reports that we send you and here’s how you can set goals internally for your practice with these numbers. Or they’ll reach out to us and we’ll help them set those goals as an additional service.
Jonathan Van Horn:
And the ones that have had the most amount of success, they’re people that have taken a lot of this into their own hands. We’re there to help them in terms of being a support structure. If I could, I would go out there and help every single one of these practices be able to turn it around overnight. But it’s just not feasible for a CPA in the way that we help clients to be able to do that. So we’ve had many clients that have come in that have had bad experiences from other CPAs that we clean up the situation. We have people that have received really bad advice from other professionals or from their friends or from whomever, and help get them out of really bad situations from a tax perspective.
Jonathan Van Horn:
And we set people up with really good tax plans to make sure that we’re well ahead of the tax situation before national tax return comes in and they get that number saying, this is how much you’re going to owe or this is how much of a refund you’re going to get. We make sure that they’re understanding what that’s going to be. We have plenty of horror stories of people coming in saying, “The reason I’m looking for a new CPA is that it was April 15th, the day of, and they called me and said I needed to make a $200,000 payment to the government, which I only had $40,000 in my bank account.” So-
R.J. Martino:
And those stories are more common than we all like to talk about.
Jonathan Van Horn:
They are. They are. Everybody’s got a friend that has that story. And we make sure that our clients don’t ever have … aren’t the ones telling them the story? They’re the ones hearing the story.
Jordan Smith:
Well and you mentioned something that’s really interesting where you said your most successful clients are those practices where the practice owner takes ownership of the issue. Are you typically working more directly with the providers or does it start with one of the admin staff? And what’s kind of the most successful route that you’ve seen with your clients?
Jonathan Van Horn:
It’s mostly the owners. And the reason is that if we had … so we do have a few clients that own multiple locations, seven, eight, nine, 10 locations. But in those situations, we may work with some mid-level management a little bit more than in the smaller offices. The reason it works better with the main offices is that usually, the answers are in the owner’s head, they’re not in the office manager’s head. So it’s better for us to be speaking directly with the owner for a lot of the situations. Whenever they grow to a certain size, we definitely will start bringing in some support staff to help facilitate some of that or delegate some of those informational requests. But in general, it’s the owner.
Jonathan Van Horn:
But in terms of what I’m saying, they take it into their own hands, I’m saying that they see okay, we should have supply cost between seven and 8% of our total revenue. Right now it’s 11%. There are two ways that somebody can look at that information and take that information. One they can say, “Well, it just is what it is and that’s what’s going to be.” And the other is they can say, “Okay, we’re going to use this guideline as an area where we can set a goal. Right now we’re at 11%. We need to go down to 8%. That’s about a 4% decrease in our supply cost. How do we do that? Or where do we need to raise revenue? Is this an area where we need to be focusing? Let’s actually go through this and look at this.”
Jonathan Van Horn:
So you mentioned accountability at the beginning of the call as well. And I used to have a little joke that I would say, or I guess a saying that I’d say that we like to put the accountability back into accounting. Because that’s what we’re there for, is those numbers are there to give accountability to yourself to say, “Hey, this number is or isn’t where it needs to be and let’s investigate it, see if there are any issues that we can diagnose inside of this number and let’s try and fix it.” And then you use the numbers as you go on to keep track of this whatever you originally diagnosed is actually the cause of the number being the way it was or not. Yeah. So that’s how we lay it out for people.
Jordan Smith:
Yeah. And that’s a great point. I can’t tell you how many practice owners we talk to that say, “I’m busier than ever, but I’m just not profitable.”
Jonathan Van Horn:
Exactly. Yeah.
R.J. Martino:
And how many of them that we talk to that are super, super busy but literally can’t even tell us if they’re making any money. Busy even to like to pop their head up and check it. You said two other things that I just want to make sure the audience hears. One is your most successful clients. My most successful clients are the ones where the physicians or the owners step up and say, “I know I’m a physician first, but I’ve got to put my business owner hat on and I’ve got to make the changes that I want to see.” Because so much of having a successful business is sitting in your head and you need someone like Jonathan to come in and get that out of your head. But until you can get it out of your head and get it into a paper format, Jonathan can’t even do his job properly.
R.J. Martino:
I can’t do my job properly. So that accountability piece is just huge and resonates a whole lot. The other thing that you talked about is this concept of setting goals and proper goals. And that is foreign to a lot of practices too. We just work as hard as we can, as fast as we can and kind of throw our hands up and say, “It is what it is.” And that is flawed thinking. It is not what it is. There are ways to improve. You just have to have a strategy to do it. And I love that you’re doing all three of these things, especially the management reports. Management reports, accounting, and taxes. You’re kind of taking the entire accounting idea and doing all of it.
Jordan Smith:
I mean, it’s almost like they have a CFO type of role, right? Is that fair to say, Jonathan?
Jonathan Van Horn:
Yeah, we like to call like a very CFO light reporting type role. And then we say, “Hey, if you get to a point where you are needing more than what these reports are giving you, maybe you need somebody to sit down with you and actually help you analyze these things. Then know maybe we can have an engagement that does that as well.” One of our accounting directors is someone who was a CFO of a healthcare company that had 80 employees, multiple locations, multiple millions of dollars in revenue. He was CFO for that company for I think 10 years. And so we have people on our staff that have been CFOs at a very high level. They help our clients with that as well.
Jordan Smith:
Very cool.
R.J. Martino:
And you talked about 75% of your clients are starting a new practice. We’ve also talked about how amazing it is to find these practices that are not successful. Not successful might mean many things. Maybe they’re losing money or maybe they’re just not making as much as they did when they were employed somewhere or maybe it’s just not as big as they want it to be. Do you work with what I call these turnaround clinics too? Or do you have a type of customer that you like working with? What’s your ideal customer?
Jonathan Van Horn:
So yeah, we work with … Our ideal customer really isn’t someone who’s trying to turn something around from the practice activity side. Our ideal client is someone who’s needing help with better understanding of what’s going on. So it doesn’t really matter if they are someone who is trying to turn something around or if they’re someone who is trying to just get a better grasp around what’s going well. We have lots of clients that do a really good job and they like you looking at their numbers because it helps drive them to do better. As business owners, one of the really odd things that happen is there comes a time in your business if you’ve had some, what you would call self-defined success, that a lot of people get to that point and reach complacency. And so our reports can also help that person understand where they are and see if they can maybe improve even more in what they’re doing.
Jonathan Van Horn:
Because a lot of our clients are very self-driven and they want to go in and say, “Hey, while, okay, I made more money last month than I ever made before, these areas of my business could still probably do better and I could actually do better than that.” So they use that as a way to drive themselves forward. So it’s more of that accountability there too. In terms of if we help people with that, we’ve got a lot of clients that have gone that route. It’s new practice owners. I will tell you most of these turnaround practices, so for example, let’s say someone has been in business ownership for 10 years and they’re in what you would call a turnaround practice. Most of the time those people aren’t going to be looking for us, because they are probably at a phase where they don’t really know what they’re wanting.
Jonathan Van Horn:
What we would be helping would be the person who goes in to buy that practice from that person and is wanting to turn that around in that way and have their back end be set up and be understanding of what’s going on in the practice. So that whenever every month they’re going to know how much cash did we profit, how much total profits do we have, how well did we spend our money and where did our cash go to. And we’re going to be able to tell them that with pretty defined numbers. So yeah, it happens. Dentistry is a bit of a unique game in that there’s usually only one provider per office other than the hygiene. So it’s one dentist typically. And we’ve definitely found that provider’s ability to be efficient as well as to effectively deliver different treatment plans and to have people accept those is a big, big piece of the puzzle of being a successful dental practice owner.
Jonathan Van Horn:
There’s a lot of practices out there that they’re doing less than what an average office would do. I think the statistical number I looked at I think from the American Dental Association was like an average general dental practice that was somewhere between seven to $800,000 a year in revenue. Then I think our average client is a little bit over a million in revenue. If you exclude the startup practices, people that are literally starting from scratch. They take a little longer to get going. But we definitely see a lot of the turnaround practices in dentistry. We typically see are doing somewhere between four to 600,000 in revenue. And those, when they sell, they’re selling to someone who thinks that, hey, maybe there’s an opportunity here. Maybe these people aren’t doing something efficiently or maybe they’re not doing something effectively enough compared to what I can do there. So the way that we help those people is by analyzing those practices and helping them understand if there is an opportunity there. Because I also, yeah, we also help with acquisitions.
R.J. Martino:
Yeah. So they might engage you while they’re planning, not at the point that it’s an engagement, but you can actually help them on the MNA side even reviewing existing practices. Very neat. We all meet with certain types of customers and we just look at it and we see kind of key indicators where we know we can help these people. It could be I am the king of TMJ. And so you see a patient that has TMJ problems, you’re like, “I’m your guy.” In your world, are there like key indicators or how do you determine if you can actually help someone?
Jonathan Van Horn:
So there are two ways. So since we offer two main services, the accounting service, and tax service. On the accounting, the side is if there’s a, we did 1.4 million last year in revenue and I have no idea. And then, well I guess typically they’ll say that and I’ll say, “And how much money did you make?” And they’ll say, “I don’t know.” They’ll say, “I have no idea.” And I’ll say, “Well if you don’t know how much money you made, how do you know if you’re doing a good job on running the business?” And then at that point, we’ll go down a path and we can determine if our reporting would be something that could help them. I’ll send them examples of what our reports look like and things like that. And that’s a good client from the accounting side because it’s if they also are saying, “I’m spending all this time every month going in and looking at my bank statements and seeing all of this information from my CPA and all this other stuff.”
Jonathan Van Horn:
Then I’ll know also at that point we’ll also be able to save them a lot of time because while there is the input required from the owner, we do a whole lot of it on our end. So like the way our … basically the only thing our clients have to do from an accounting side is they have to have somebody in the front office that’s closing the day down from a deposited side. Going to have to close the register down. And then they have to have, once every couple of weeks like an email from their account manager that works with our team. They’ll say, “Hey, we saw these five transactions. We weren’t exactly sure what they were for. Could you please give us some clarity or a narrative behind what these expenses were or revenue even.” If there was a deposit that was a little bit odd. And then at the end of the month, they’ll have their accounting report.
Jonathan Van Horn:
So literally all they have to do is make sure their front office is doing … has a strong process, which they have questions about that we can help them with that too. And then they basically answer an email a couple of times a month and they’ve got the report. So that’s the accounting side. From the tax side, the question is what are you doing for your tax planning? And most of the time the answer to that is, “I don’t even know what tax planning is.” So at that point, we’ll say, “Well, okay, well when does your CPA talk to you about the different deductions that you could potentially be taking versus the ones that you are taking?” And a lot of times that answer is, “Well, that doesn’t really happen.” Or maybe oh yeah. I filed my returns last year. And then they said, “Hey, did you do this year?” And I say, “No.” And then they say, “Well, maybe you should do it next year. And then that’s the end of it. And that just continues year over year over year.” So very reactive. And that’s sometimes that’s a lucky thing. So yeah.
R.J. Martino:
Well, yeah, I love this concept of the kind of taking the ownership of both management accounting, tax accounting and just day to day accounting work because tax planning has so much overlap with day to day, like operations. But if you ask an office manager a tax question, or if you ask a billing, one of your billing team members a tax question, they throw their hands up and quickly say, “I don’t know. That’s a … I don’t know IRS rules. That’s not my game.” But they overlap so much that you actually need to kind of be in day to day to provide, from my experience, to provide good tax planning services. It can’t be the only time you look at my taxable income or my strategies for taxes is only once a year. So I like that you do it all together.
Jordan Smith:
Yeah. That’s interesting. And speaking more to that for the listeners out there, what are some like practical, strategic things that you would tell them, “Hey, whether you call me or not, here are some things to look at or start to implement in your practice.” Could you share some of those best practices?
Jonathan Van Horn:
Yeah, I mean, number one is you have to understand what’s happening in the office from a financial perspective. And are we’re talking about from the accounting side or from just both sides?
Jordan Smith:
Oh, from both sides. Yeah.
Jonathan Van Horn:
Yeah. So from the accounting side number one is you have to understand what’s happening in your practice from a financial perspective. It’s whenever we started our company, we started as an outsource CFO company and I would have these monthly meetings with my clients to discuss their financial statements. And I quickly found that almost none of my owners understood what a financial statement was or how to read one. So I was basically just, I was translating that financial statement for them.
Jordan Smith:
It’s going back to they spend 15,000 hours being a dentist, but zero hours being a business owner.
Jonathan Van Horn:
Exactly. So, and I quickly found that there was, I had like a flow of what I would be talking to them about and it would be let’s talk about how profitable you are. Let’s talk about how well you spent your money, let’s talk about how much cash did you actually profit and let’s talk about where your cash went to. And so that would happen to over and over and over and over again. And at first, I was like, “Let me train people on how to read financial statements. Let me teach them how I’m getting to what I’m getting to.” And for whatever reason, that just never worked. Well, it worked but on a very, very low success rate. And the reason is, are they just had … These people had all these other things that they were worried about. They didn’t need to have to learn a completely new concept. One that’s very qualitative in nature. Like it’s hard to understand if you’ve done a good job of reading your financials or not without input from somebody else.
Jonathan Van Horn:
So eventually we said, “Hey, let’s just take these questions that ranching every month and put it into a report.” And so that’s what we did. And that’s how we came up with our management report is those were the four main questions that we were talking with people every month. It does such a good job of answering those questions now that we don’t even have those monthly calls anymore with our clients. We just deliver that report. Then we have like a guide that goes along with the report that says, “Hey, if this number is high or this number is low, this is what you should be doing to analyze this number.” And it’s just all in an educational format. We like to say that the two sides of the coin in Tooth & Coin are quality of service and education.
Jonathan Van Horn:
So very high levels of service. And you’re going to learn about the accounting side and tax side whenever you come in with us. From the tax side, one of the main things you’ll need to implement as a business owner is understanding even how taxes work. I get questions literally every day where from people that aren’t clients, because I’m pretty active on social media and through my podcast, things like that. So people know my email address is out there. And so people ask me questions all the time. And they’ll say things like, “Can I deduct this?” And my answer is always maybe. It depends. Because they’ve read something online like hey, I can deduct this because ABC or I saw somebody else do it. Or my friend Dr. Bill said that he wrote off his vehicle. So I bought my vehicle with my business card and my CPA let me do it last year. And they don’t understand that that’s not how this works.
Jonathan Van Horn:
Like there’s that commercial where the lady goes, “This is how this works. This isn’t how any of this works.” Because the woman has like the pictures on the wall and she says she’s friending people on the wall or whatever it is. That’s how … it doesn’t work that way. So the way deductions work is that you’re either following the rules or you’re not. And if you don’t follow the rules, then you don’t get that deduction. So you have to be educated on what the rules are to be able to follow the rules. Like you can’t go out and just join a game at a new sport and just not be told any of the rules if you’ve never even seen that sport before.
Jonathan Van Horn:
So you’ve got to be educated on what the rules are. And in order to have effective tax planning done, the education has to be a piece of it. You have to be saying, “Hey dude, this deduction is possible. Here’s how [inaudible 00:30:03] you have qualified for this deduction. Here are the steps to be able to implement this reduction in your practice that you may be able to take it. And then finally, here’s the economic impact if you decide to take this type of deduction.” Because if it’s only worth a couple of hundred bucks but it takes you 10 hours to do it, it may or may not be worth it to you to do that. But at least you’ve been educated on if it’s a possibility or not. And we typically find now that we’re educating people on 10 to 20 concepts every year of different deductions they could potentially be taking that they may not be taking now.
Jonathan Van Horn:
And without active tax planning, you could be taking those deductions, but you may not be taking them within compliance of the tax code. So I also deal with people who say, “It’s actually really easy to take any deduction. Technically, all you have to do is have your CPA top in some letters and then put a number beside it and that’s a deduction in on your tax returns.” I mean, yeah. So anyway, so you have to understand it. You have to follow the rules in order for that deduction to be protected, and to … Because at the end of the day, you’re the one responsible for your tax return. A lot of business owners don’t realize that your CPA has very, very limited exposure to your tax return being right or wrong. Because any CPA that has malpractice insurance or goes by the code of ethics has to have an engagement letter to file your tax return, which means that you … and in that engagement letter, it’s going to say, your tax return is … You’re telling me that the tax return right. It’s not our job to make sure it’s right.
R.J. Martino:
I love it that you’d said your core values of quality of service and education and that’s so true. I think the audience needs to hear that again. There is limited liability that your CPA has on your specific tax return. And so it’s important that you’re getting educated on what is and what isn’t deductible. So I love that framework. The four questions, you said you get these four questions over and over. Can you rattle those off one more time just for us? I think-
Jonathan Van Horn:
Sure. It’s how profitable were you? How well did we spend our money? How much cash did we profit and where did our cash go to?
R.J. Martino:
Perfect. And those four questions for our audience are great questions to ask yourself. If you can’t answer that, you don’t have a handle of your finances like you need to. And it’s okay. That doesn’t make you abnormal. In fact, I think that probably, Jonathan correct me if I’m wrong, but that’s normal. That is most practices out there. But it’s not the best of the breed. If you want to be best in class, you’ve got to know how profitable are we, how do we spend our money, how much cash did we actually profit and where did our cash go? So I really like asking those four simple questions because I know the audience or at least the audience members that I do know, those questions will resonate with them.
Jonathan Van Horn:
Yeah, absolutely. And they always say what gets measured gets managed. And if you’re not up to speed on what those items are, even if you have a very, very successful practice just by the fact of you’re a natural leader and things have fallen in place for you and maybe there’s a little bit of luck that goes on with that too. Even if that’s the case, if you’re not tracking those numbers, you’re not going to realize if those numbers start dipping. So using those numbers and using those answers to those questions is a really good way to keep transparency around what’s happening in your business. I think it was Warren buffet that said that, “Accounting is the language of business.” And so what we say is that it’s our job to help translate that language to something that you can understand. And the manager report does that for our practice owners.
Jordan Smith:
I love that. That’s great. And I know we’ve talked a lot about practice owners. As far as other team members that are involved, who else typically in their office is critical to your partnership with them being successful?
Jonathan Van Horn:
Yup. So for our office, it’s mainly the practice owner, the person that we’re helping with the tax planning. There’s usually, we have varying sizes of practices. Like we have a startup practice will typically have two employees. They’ll have the owner that won’t be an employee because they’ll be a disregarded entity. But they’ll be, they’ll have an employee, they’ll have an assistant and they’ll have a front office person. And we talk mostly with the practice owner. Once they hit that kind of average size practice, somewhere around 800,000 to a million in revenue a year, then they’ll have anywhere between five and eight employees. In order for our job to be, for our service to be successful at that point, it’s still mostly on the practice owner. But they’re going to have to delegate some things to their team members such as maybe there’s someone on the team that’s writing a check or processing their payroll.
Jonathan Van Horn:
And our team helps support those people. We don’t write checks for our clients or do bill pay or anything like that. We don’t do payroll either. But we do support the clients and teaching them how to do it in an effective manner and efficiently as well. And if they get to that kind of average-sized practice, usually the practice owner is not the person running the payroll at that point. Usually, it’s somebody in their office. So we’ll work with that person. Our account manager will make sure that they understand how to run payroll and it’s being done in the correct fashions. And yeah. And then there are always other people and that are other professionals that we work really well with. So for example, bankers. If someone has a banker that they really like, we’re happy to work with them. We do.
Jonathan Van Horn:
If someone signs up with us for some of our more advanced services, we will sometimes look at their debt schedules and see if there’s any way we can optimize us in anyways. And sometimes that means going to a different bank. But financial advisors, we work really well with them. We don’t do financial advisory services in our company. So personal financial planning, things like that. But if we are going to say, “Hey, we’ve got, this person needs to probably look into having a new type of retirement plan based off of their taxable income,” then they need a good financial advisor that’s going to be a help to them through that path as well. So financial advisors, bankers, attorneys can sometimes come into play as well that we’ll need help with. So pretty much people that you’d have on your board of directors that we’d be there with, they’ve got to be good too. Marketing companies can be there too. We don’t typically interact much with the marketing companies. But I know that our employees our, sorry, our part doctor owners depend on them too.
R.J. Martino:
I think knowing some of the audience members that are listening to this now, they hear this guy’s going to educate me, he’s going to have superior service and he knows this business. I want to talk to him immediately. But the big question they’re asking themselves as he’s got a … this is probably a fortune or I bet he … I wonder how he gets paid. Can you talk about typical pricing models in the industry or go into it as deep as you’d like to on is it likely to cost?
Jonathan Van Horn:
Yeah, I’m pretty transparent. So the way that we do our billing is through fixed fees. So it’s the same amount every month. It’s almost like a subscription, like a Netflix thing. Especially for our accounting services and our tax services. In terms of the industry, it’s a bit of a wide breadth. So if you’re going to go with someone that’s a local CPA, particularly you’re going to be paying a lot less than you would someone who’s specialized. Just like if you were to go to a specialized doctor, you’re going to probably pay a lot more than what you got if you went to a general doctor. And if you’re looking at someone that’s local for accounting services, depending on the size of your practice, and this is talking about dentistry. I’m not certain about all different walks of medical practice. And this also depends on where you are.
Jonathan Van Horn:
So for example, we’re in Little Rock. In Little Rock you’d be talking somewhere three to $500 a month for accounting services which would be mostly bookkeeping, keeping up with your QuickBooks and things like that. You wouldn’t have the manager report at the end. You wouldn’t have someone who’s very familiar with your business on that end either. And our services are about the same, 500 bucks a month is where our base price is. So it does cost more. It does go up from there if you have multiple locations or you’re practicing much more than the average, then our processing does go up from there. So that’s for accounting. But there are certain areas of the country where I sometimes sit and say, “Why are we only charging $500 a month to people in San Francisco?”
Jonathan Van Horn:
Those are the most expensive places in the country. But it’s simpler for us just to keep prices the same throughout the country, so we do. And even though I know that if they were to do it in their local areas, that 500 bucks are really, really cheap. For the tax side, you typically see in the dental space if you’re tax specific, well I’ll talk about local first. But actually I’ll go back to the accounting side. So dealing specific for accounting, it’s usually fairly comparable. You’re usually talking somewhere between six and $10,000 a year for a dental-specific firm to be doing your accounting. There are other ones out there that have done a good job like we have to compartmentalize the value that we bring in accounting. And they are comparable in prices to us.
Jonathan Van Horn:
But there’s, I can literally count on one hand how many there are of those. The more traditional accounting methods, it’s typically between five and $10,000 a year for those for dental specific firms. On the tax side, the typical pricing model for like a local firm here in Little Rock, you’re probably talking somewhere between 500 and $1000 a year for your personal return to get completed and somewhere around 1500 to $2,500 to have your business return completed. More fairly comparable for that on our preparing the return side. So there are two levels of service. There are preparing returns, which is the basic level that’s taking the numbers from one piece of paper and putting it on the tax return. And that’s like the base level of service that CPAs typically offer.
Jonathan Van Horn:
I mean, you can technically go to a Liberty Tax or H&R Block to have that done. We charge somewhere around three to $4,000 a year for personal and business returns to be completed. For the tax planning, which is where most of the value comes from, from our service, you’re usually looking at somewhere around $5,000 a year or for our service for that for the first year. And then every year after that it decreases to about $2,500. So the first year is the year we have the most amount of work to do and every year after that we update it.
Jonathan Van Horn:
And then if ever somebody signs up with us for accounting services plus tax planning plus tax preparation, we do like a package deal to where they get discounts in all the services because we have different efficiencies that are gained by having us do the accounting and us doing the tax planning as well as the prep. So, yeah, that’s, yeah, on the national level, you’re looking at usually around 10 grand a year for dental specific firms to do that kind of stuff for you for the tax side.
Jordan Smith:
That’s a great value.
R.J. Martino:
Well, this is amazing. Just your transparency and your ability to be open and it goes back to that core value of education and great service. How many times have we been on one of these podcasts and its secret sauce on what things cost? And your transparency is just great. And guys, the audience, I’ve been friends with Jonathan for a long time. He has always been open, honest, transparent. It’s one of the things I love about him and I’ve always thought this is going to be a very successful business because at its core it’s willing to educate its people as opposed to just do the service and find the next guy. So, man, I applaud you. I’m excited. The very last thing we get into is what we call the final round. And we’re big believers that businesses are just systems within systems. And there are systems for client intake, there are systems for billing, even doing tax returns.
R.J. Martino:
It’s a systematic approach. And so what I want you to do is think back and if there was just a magic reset button, and we’re talking about your practice or your business, what system would you go back and put into place sooner rather than later and why? I know that’s a hard question, but it takes a while to learn about building systems and the value of them and then you implement one and you see it. And then you implement 10 other ones. And out of those 10, you implement a couple of special systems. What systems do you implement?
Jonathan Van Horn:
Yeah, so ours was … Yes?
R.J. Martino:
And I’m sorry, if you could go back and just hit the reset button and implement one immediately, which one would it be?
Jonathan Van Horn:
So our story is a bit unique in that we started off with just me and a business partner. The business partner and I split up about six months into the business and then it was just me. And then that was six, seven years ago. And since then we’ve gone from just me to having 12 other employees. And so we’ve grown. And I guess it was three years ago we had four employees. So in the last years, we’ve gone from four to 12. So one of the things that are always interesting to me is that any business that is growing is changing. And so my business today looks very different than it did a few years ago. And for me, in terms of a process or a system, the best thing that I’ve ever done for my business is hiring very high-quality people.
Jonathan Van Horn:
We only hire the best people is what we try to do. We don’t like them in the … I’m not of the management mentality of having butts in chairs. I want to have people that are forward-thinking, that care about our clients and that are really good at it. When I was starting out, there was, to be honest with you, I had a young family and I had to put food on the table and I probably kept too much of it on my table from the business standpoint and didn’t delegate enough. But when I started hiring people that were really high quality, I got really lucky with my first few hires that they were very high quality as well. So they were, had the ability and aptitude to take on some of the roles I was giving them. But whenever I really started to realize that there are things that I don’t have to do, it was whenever my business started growing a lot better, a lot more efficiently. So yeah [crosstalk 00:46:10].
R.J. Martino:
Well, yeah. That is another level of maturity when you realize. All the time we’ll meet with people and they say, “I got the worst people in the world.” And we dig into it. And it’s because when you were hiring, you weren’t willing to pay anything. You were desperate because you were overworked. So you told everybody, “Hey, anyone who walks in here, I’ll hire them.” And learning that a bad hire costs so much more money than not having anybody at all, is a maturity level. So I would completely agree with you. I think that’s great advice is to be patient on hiring because you need gritty people and invest in those people. Very good.
Jordan Smith:
Well, Jonathan, I know you’re busy. We appreciate it. The last thing, let people know if they’re interested, how they get in contact with you. What’s the best way to find information about you personally, Tooth & Coin. How should they reach out?
Jonathan Van Horn:
Yeah. So we have website toothandcoin.com. It’s got our story there. It’s got more about my team and some of the services we offer. It’s got links to all the podcasts that we’ve recorded in the past. And it’s got our phone number, it’s got where you can book consultation calls. And my email is Jonathan, J-O-N-A-T-H-A-N@toothandcoin.com. And feel free to reach out. Always willing to be helpful.
Jordan Smith:
Well, like RJ said, just from knowing Jonathan, he’s an open book, so is everyone in his organization. So if you have any questions at all, we’ll include all those links and the email in the show notes. But I would encourage all you guys, as he said, he [inaudible 00:47:54] questions all the time. I would encourage everybody out there, if you do have questions about this stuff or you just want to hear more about Jonathan’s story, I would encourage all you to reach out to him. I mean, we could really do a three-part series on all the stuff that’s in your head and not even scratch the surface. So [inaudible 00:48:11].
Jonathan Van Horn:
It’s all that’s in there. All that’s in there is that and small children’s TV show theme songs from having three young kids. So, yeah, I’d be happy to talk about that more than Jake and the Never Land Pirates theme song.
R.J. Martino:
Well, we love having you. Any closing words or anything else you’d like to tell the audience or any ways that we can help you?
Jonathan Van Horn:
Yeah, no. We’ve covered a lot today. Just that being a business owner is a privilege and it’s something that’s, it’s a really good thing that all of us get to do. It’s fun. But it can get to a point sometimes where you’re kind of stuck. And you’ve got to be willing to accept help to get out of those times. Like I said in the things that I wish I would’ve done earlier is hiring really good people that you can depend on. And that goes both internally as well as externally. Internally of your office and as well as having other service providers that maybe know a bit more about that area of your expertise than you do, and then relying on them.
Jonathan Van Horn:
I do believe that business owners have to do a lot themselves, but they need that board of directors to be able to give them some insight on how to do it as well as there are some things that they can have them do. So for example, filling out a tax return or creating your website or managing a paper click at a funnel or anything that happens in those realms. Those are things that are important to a business, but they may not be important that you do it. So finding good people that can help you with it. And you’ll sleep better and your business will be more successful.
Jordan Smith:
Perfect.
R.J. Martino:
Love it. Jonathan, can’t tell you how much we appreciate this. Thanks for your time. Jordan thank you for your time. I know you’re busy too. So guys, speaking from the audience because I talk to them so often, I just want to say thank you and keep doing what you guys are doing and telling the world.
Jordan Smith:
Alright everyone, Jonathan with Tooth & Coin.
R.J. Martino:
I think I could really get along with that guy. Just the openness and education is just, I hate when people act like what they’re doing is the secret sauce. Because there’s no secret sauce. It’s all so the more transparent people are, the better. And he just did a great job of being transparent and having a framework like we always talk about how to succeed or how to deliver that service.
Jordan Smith:
And just all the knowledge in his head. Even after we recorded, we talked to him about trying to have him back on. So if you guys liked what you heard there, encouraging news is I think we’re going to have Jonathan on again in the future to talk about more specifics. So-
R.J. Martino:
Well, and if you have any questions or you want to dig into that more, feel free to send me the questions directly or talk to Jonathan directly too.
Jordan Smith:
Yeah. Toothandcoin.com, he said you can reach out to him, jonathan@toothandcoin.com. If you have any questions for him, I would encourage you guys to reach out. If you have questions for us, please feel free to reach out, subscribe, like, comment. Anyone that you guys know that you want to hear from or any topics that you would be interested in, we’re all ears. So this is for you guys. So any way we can add value, we want to.
R.J. Martino:
One thing you could do for us, everybody has a dentist that’s listening to this. I don’t care if you’re thinking I’m not a dentist. Everybody has a dentist. For this, share it with a dentist. I’m telling you, they will get value from this conversation. And hopefully, they’ll be a longterm listener from there. So that would help us a whole lot. Jordan’s right. We’re trying to do this for you. If you’ve got any recommendations, a wishlist, anything at all, please send it over.
Jordan Smith:
All right. iProv Made podcast. Thank you guys so much and I hope to hear from you guys soon. Peace.
