Dental Advisory Group Dec 2010 Newsletter

1. dental
advisory
group
v o l u m e 1 · i s s u e 2
d e c e m b e r 2 0 1 0
Strategic “Navigational Coaching”
Skills Can Grow Your Practice
What do you do when the term of the
lease for your premise is set to expire?
Valuing A Professional Practice:
Common Myths and the Use of
“Rules of Thumb”
You and Your Taxes: Establishing A
Year Round Process
Maximizing Return On Investment
3
4
5
6
7
FocalPoint Coaching Inc.
1801 8 Street SW
Calgary, Alberta T2T 2Z2
p 403.585.9601 f 403.648.2902
www.focalpointcoaching.com
JMH & Co. LLP
400, 900 - 6 Avenue SW
Calgary, Alberta T2P 3K2
p 403.261.0835 f 403.262.4281
www.jmhca.com
ScotiaMcLeod
Suite 300, 119 6th Avenue SW
Calgary, Alberta T2P 0P8
p 403.298.4000 f 403.298.4001
www.scotiamcleod.com
Miller Thomson LLP
700 9 Avenue SW
Calgary, Alberta T2P 3V4
p 403.298.2400 f 403.262.0007
www.millerthomson.com
Patterson Dental
112, 4152 27 Street NE
Calgary, Alberta T1Y 7J8
p 403.250.9838 f 403.250.8039
www.pattersondental.ca

2. dental advisory group 3
c o a c h ' s c o r n e r
Patterson Dental
John Vander Velden
As one of North America’s largest distributors of
dental merchandise, Patterson Dental offers over
90,000 products and a wide range of leading
equipment, software, technology solutions and
services.
From humble beginnings in a one-room
Milwaukee drugstore in 1877, Patterson has
grown to meet the needs of dental professionals
through more than 85 branch offices nationwide
and over 1,500 sales representatives and
equipment specialists in the United States and
Canada (Patterson Canada).
While dentistry has experienced many
changes over the years, relationships with
customers remain strong and growing—built
on a solid foundation of trust, tradition and
technological innovation.
JMH & Co. LLP
Jay Schmidt
We pride ourselves on our proactive approach
to accounting and business services. Keeping
current on new tax laws and legislation allows us
to identify key financial opportunities that can
help you generate ideas to increase revenues
and promote growth for your business and
personal accounting. Providing a complete line of
accounting services is just one example of what
we do. We provide a complete line of business
development, consultation and management
services. In short, we help you build, grow and
develop your business.
Our clients are people just like you, ranging
from individuals just starting a business to
seasoned executives and multi-million dollar
enterprises. Whatever your business need, we
want to help you. We’ve been helping people just
like you… for over 90 years.
FocalPoint Coaching Inc.
Pat Lipovski
Helping Professionals realize their true business and
leadership potential.
FocalPoint Coaching Inc. (FPCI) is one of
Canada’s leading coaching firms, focused on
developing professionals in practice. With a
quarter-century’s experience, FPCI has worked
The dental advisory group is a team of
experts designed to help new and existing
dentists maximize the intrinsic value of their
practice through professional advice.
contributors John Vander Velden , Jay
Schmidt, Pat Lipovski, Greg Kraminsky,
Colin Andrews, Steven Molina, Dean Barrett,
Darren Smits.
layout & design Curious Communications
Printed in Canada
This publication has been prepared by ScotiaMcLeod, a
division of Scotia Capital Inc.(SCI), a member of CIPF. This
publication is intended as a general source of information
and should not be considered as personal investment,
tax or pension advice. We are not tax advisors and we
recommend that individuals consult with their professional
tax advisor before taking any action based upon the
information found in this publication. This publication and
all the information, opinions and conclusions contained
in it are protected by copyright. This report may not be
reproduced in whole or in part, or referred to in any manner
whatsoever, nor may the information, opinions, and
conclusions contained in it be referred to without in each
case the prior express consent. Scotiabank Group refers to
The Bank of Nova Scotia and its domestic subsidiaries.
extensively with top leaders in the fields of
accounting, law, health care and the corporate
environment. Our team includes top-ranked
coaches, accredited leaders and a community
of accomplished professionals who all subscribe
to the same philosophy and delivery model
grounded in the key fundamentals of business and
leadership success.
ScotiaMcLeod
Greg Kraminsky, Colin Andrews & Steven Molina
ScotiaMcLeod is a division of Scotia Capital; the
full-service investment arm of Scotiabank. As
such, we are a leading financial services provider,
offering a complete range of investment products
and services to meet your present and future
needs. This means you have access to individually
tailored investment advice.
The CM Group at ScotiaMcLeod is a team of
investment professionals who focus on providing
clients with comprehensive and customized
financial solutions based on conservative and
disciplined strategies. Together, we have more
than 80 years of combined industry experience
helping clients in Wealth, Retirement and Estate
Planning.
Miller Thomson LLP
Dean Barrett & Darren Smits
Miller Thomson LLP enjoys a reputation as one of
Canada’s most respected national business law
firms. Our consistent ability to provide practical,
creative and cost-effective advise, combined with
an unyielding service commitment to our clients
and a strong dedication to our lawyers, staff and
the communities in which we practice, gives us a
unique position in the Canadian legal industry.
The firm provides a complete range of legal
services with close to 450 lawyers working
across Canada. Many of the firm’s clients are
private business enterprises and professional
corporations, both large and small. Our firm’s
business lawyers provide a complete range of
corporate legal services for all of its clients,
including commercial law, estate planning, tax
law, employment law, civil litigation leasing and
real estate.
v o l u m e 1 · i s s u e 2
d e c e m b e r 2 0 1 0
Strategic “Navigational Coaching”
Skills Can Grow Your Practice
Coaching is about supporting others to be more
effective in getting from place to place. The
word place, of course, represents many things
beyond physical location; place can refer to level
of productivity, earnings, quality of relationships,
leadership effectiveness, professional status,
sense of fulfillment and more. Coaching is a
method to help others navigate—not by steering
or charting a course for them, but by supporting
them to “navigate” toward a set destination for
themselves.
FocalPoint’s 2-day “Navigational Coaching”
program helps equip dentists with skills and tools
to become more effective leaders and coaches
who increase motivation and inspire results to
even greater levels. “Navigational Coaching” is
the art of exploring and engaging potential that
exists within five major navigational challenge
areas faced by individuals in life and at work:
1. Clarifying where they want to go.
2. Understanding where they are now.
3. Plotting a course forward and committing
to action.
4. Receiving positive reinforcement.
5. Knowing when to course-correct.
Learning to be a great Navigational Coach
involves thinking differently, learning new
skills, listening to intuition, exercising restraint,
developing wisdom and being willing to practice
skills that drive motivation and results.
FocalPoint’s 2-day “Navigational Coaching”
program will help you navigate toward greater
results by practicing and refining strategic
coaching principles.
Day One: Focuses on learning and practicing
foundational principles and skills.
Day Two: Explores more advanced skills and
more challenging coaching situations.
Who Should Attend?
This program is designed specifically for
practice leaders interested in enhancing their
capacity to develop other people’s potential
through effective coaching conversations.
Program material is just as suitable for senior
practitioners as it is for new dentists.
What to Expect?
As a result of attending, participants will:
• Learn the key principles that define successful
coaching interactions.
• Benchmark their current level of coaching
effectiveness and assess progress.
• Explore the difference between the problem-
solving mindset and the navigational coaching
mindset.
• Understand where and when to apply a
coaching approach.
• Learn a tested and proven coaching model.
• Explore fundamental coaching skills,
including:
• The Art of Conscious Listening
• The Art of the Question
• The Art of Telling
• Practice key principles and skills and receive
feedback on coaching.
• Learn how to give both positive and corrective
feedback.
• Learn how to deal with more challenging
situations (Day 2).
• Learn more advanced coaching skills (Day 2).
• Enhance and consolidate learning through
both pre-work and post-course assignments.
For more information in FocalPoint’s "Practice
Leader as Coach program", please contact
Pat Lipovski.
c o n t r i b u t i n g a u t h o r s
Learning to be a great Navigational Coach involves thinking differently,
learning new skills, listening to intuition, exercising restraint, developing
wisdom and being willing to practice skills that drive motivation and results.
Pat Lipovski
leadership coach & program facilitator,
focalpoint corporate coaching inc.
plipovski@focalpointcoaching.com E
403 355 2746 P
403 585 9601 C

3. 4 volume 1 · issue 2 | december 2010 dental advisory group 5
What do you do when the term of the
lease for your premise is set to expire?
So the term of your lease for your premise is set
to expire, now what do you do? Basically there
are three options that might be available to you:
1) allow the lease to expire; 2) renew the lease; or
3) extend the lease.
Allowing the Lease to Expire
If you wish to allow your lease to expire, as you
want to look for a new premise to lease, it is
important that you understand your lease and
comply exactly with the provisions it contains. If
you fail to comply exactly with those provisions,
you may find yourself stuck in the lease again.
The reason for this is because some leases
include the wording that a failure to give written
notice within a required time frame may result in
the automatic renewal of the lease. In addition,
some leases operate on a month-to-month
basis and continue to stay in effect (often with
increased rental payments) until notice is given
by either the landlord or tenant.
Renew or Extend
If you intend to renew or extend your lease, it is
important that you fully understand the renewal
and/or extension provisions of the lease and that
you know your rights and options. Almost all
leases have a provision stating the terms under
which the lease may be extended or renewed. In
most cases advanced (written) notice of intent
to renew or extend is required within a specified
time frame.
Also, it is important that you understand
the question: whether to renew or extend the
term of your lease? Practically there may be no
difference, but legally an extension extends all
the rights and obligations under the lease for a
further period of time while a renewal creates
a new term and a new lease. Under a renewal,
“personal” rights will no longer apply, however
rights that "run with the land" will continue. The
distinction between rights that are “personal”
and rights that "run with the land" has not been
clearly defined by case law and each lease needs
to be interpreted based on its wording. For
example, in some instances options to purchase,
rights of first refusal and guarantees have been
held to be “personal” and as such not in effect
on a renewal. The Courts have sometimes held
that personal rights are separate from the lease
itself and must be expressly included if they are
to apply during the renewal term. This may have
Valuing A Professional Practice: Common
Myths and the Use of “Rules of Thumb”
Likely you have encountered situations with your
Professional Practice where a valuation of the
Practice was required. These situations include,
but certainly are not limited to, buying or selling
a Practice, admission, dismissal or retirement of
a Partner or other considerations such as estate
planning or matrimonial property.
Value is a function of contributing factors
and many of these factors can be unique to a
particular Practice. Each Professional Practice
must be valued according to its own individual
set of facts and circumstances. “Rules of thumb”,
while simple and cost effective to apply, have
limited application and are seldom reliable. This
does not mean they are not important within
the realm of valuing a Professional Practice,
only that they must be used with caution as a
‘reasonability check’ on the value as determined
by a more detailed, in-depth valuation approach.
“Probably the two most frequently
mentioned “rules of thumb” for the valuation of
Professional Practices are (a) 100 per cent of
annual gross revenue for the total net operating
assets including goodwill; and (b) net tangible
asset value plus a goodwill value equal to 100
per cent of gross revenue. For more than 9 out
of 10 Professional Practices the 100 per cent
myth results in a material overstatement of
market value.”1
Dental Practices have several
characteristics that make them different
from other Professional Practices as they
typically require very significant investment
a significant impact on some of the rights that
you thought would continue when you renewed
your lease.
If the term of the lease for your premise is
set to expire and you require assistance with
reviewing and interpreting the provisions of the
lease and discussing your options, please call
Darren M. Smits at (403) 298-2409 or Dean
Barrett at (403) 298-2427.
in specialized equipment and technically
qualified support staff. In addition competition,
location and growth potential, Partnership or
Shareholder agreements, operating capacity and
efficiency, patients and records and revenue and
earnings mix all influence value of a Professional
Practice. As such it is critical that the valuator
not only understand the profession but the
unique business of the Professional or group of
Professionals as well.
A commonly used approach to valuing
Dental Practices is net tangible asset value plus
an amount for goodwill (equal to a percentage of
annual maintainable fee revenue). This method
is especially applicable where the earnings of
the Practice are skewed by owners’ salaries
and benefits that are not reflected at market
value (either too high or too low). This approach
assumes that assets and gross revenues are
the most reliable figures to determine value.
Certainly the value of goodwill is influenced by
several factors including how much goodwill,
if any, is attributable to a certain Professional
within the Practice. Practically, this is dealt
with by applying a client retention factor to
the goodwill portion of the price or value.
There are other approaches to valuation of a
Dental Practice which may be more applicable
depending on specific case facts.
Determining a meaningful value for your
Professional Practice in its specific circumstance
involves much more than the application of ‘rules
of thumb’ and cannot be achieved without a
detailed, in-depth analysis of the business and
supported by an appropriate valuation approach.
The Courts have sometimes held that personal rights
are separate from the lease itself… This may have
a significant impact on some of the rights that you
thought would continue when you renewed your lease.
Value is a function of
contributing factors and many
of these factors can be unique
to a particular Practice.
Dean Barrett
associates, miller thomson llp
E dbarrett@millerthomson.com
P 403 298 2427
Darren Smits
associates, miller thomson llp
E dsmits@millerthomson.com
P 403 298 2409
John Vander Velden
branch manger, patterson dental - calgary
john.vandervelden@pattersondental.ca E
403 250 9838 P
t h e d e n t i s t s r e p o r t
1 James L. Horvath, CA, CBV, ASA, “Valuing Professional Practices”, 1990, CCH Canadian Limited, p. 72
l e g a l ly s p e a k i n g

4. 6 volume 1 · issue 2 | december 2010 dental advisory group 7
Maximizing Return On
Investment
You and Your Taxes: Establishing
A Year Round Process
treatment options. These products can have
more success than the old “drawing on a tray
cover.” Of course products like chair side Cad/
Cam, Lasers, digital impression systems and
3D X-ray can all have a direct bottom line ROI.
Certainly it can seem incongruent to walk into an
office with some of these new technologies and
30 year old dental operatories. Indeed what do
your patients say about the state of your office
when they describe it to their friends, family or
co-workers?
Perhaps it is time to sit down with your dealer
and discuss your equipment/technology plan
for the future. Devise a budget for replacement
of old equipment as well as the integration of
new technologies. Often new income generated
by new technological procedures can indeed
finance other equipment upgrades. If you plan
this right you can truly maximize the return you
will get on every dollar you invest and by the way
it is way more fun than just replacing the stuff
that stops working!
Often our clients come to us with a difficult
decision to make when investing in new dental
equipment. Do I replace old equipment, invest
in new technologies, add operatories etc?
While certainly adding an operatory or a new
technology can appear on the face of it to have
an immediate financial impact it is also worth
considering the overall age and appearance of
the offices total equipment needs.
Today’s dental patient is more informed than
those of 25 years ago and they are looking to
have their dentists be modern and up to date
when it comes to the overall feel and appearance
of their clinics. Patients want to know that you
are continuing to invest in them and their care
through up to date equipment and technologies.
One of the ways you can do this is to survey your
patients. Ask them how they feel about the state
of your practice, what improvements they would
like to see, as well as what technologies they are
interested in. They may surprise you with their
knowledge of what’s out there. Over half of all
dental clinics now have moved to digital x-ray
technology as an example, if you have not, how it
is affecting your ability to maintain your patient
base or indeed attract new patients?
Some technologies are more on the patient
communication side. As in software that can
confirm appointments, teach dental procedures
or indeed provide take home fee schedules and
Greg Kraminsky
director, wealth management, scotiamcleod - the cm group
senior wealth advisor
E greg _ kraminsky@scotiamcleod.com
P 403 298 4075
Colin Andrews
senior wealth advisor, scotiamcleod - the cm group
E colin _ andrews@scotiamcleod.com
P 403 298 4026
Steven Molina
wealth advisor, scotiamcleod - the cm group
E steve _ molina@scotiamcleod.com
P 403 298 4015
s t r a t e g i c w e a lt h m a n a g e m e n t
spouse to contribute to the RRSP of a lower
income spouse. At retirement, this can help
shift more income to the spouse who is
expected to be in a lower tax bracket.
• A spousal loan is another strategy for income
splitting. As long as a prescribed rate of
interest is paid, a spousal loan can be an
effective way to transfer assets from a spouse
in a higher tax bracket to a spouse in a lower
tax bracket.
• The pension income splitting measure
introduced by the federal government in
and payments from a registered
retirement income fund (RRIF).
2. For individuals younger than 65, eligible
pension income includes only lifetime
annuity payments from an RPP
(employer-sponsored pension) and
certain other payments received
upon the death of a spouse or
common-law partner.
Donate Securities
If you are considering a charitable donation,
Often new income generated
by new technological
procedures can indeed finance
other equipment upgrades.
Tax-Free Savings Account
The Tax-Free Savings Account (TFSA)
is a flexible, registered general-purpose
savings vehicle that allows Canadians to
earn tax-free investment income to more
easily meet lifetime savings needs. The TFSA
complements existing registered savings
plans like the Registered Retirement Savings
Plans (RRSP) and the Registered Education
Savings Plans (RESP).
Create deductible debt
Tax deductible loan interest can be a great
tax-saver. One strategy is to convert all
or part of your mortgage debt into an
investment or business loan. For example,
you could sell some investments to pay
off your mortgage, then take a loan to
repurchase the investments. This will
effectively replace your non-deductible
mortgage debt with a deductible
investment loan.
Maximize your RRSP
Your RRSP is one of the few good tax
shelters left. But don’t wait for the deadline
to make your contribution. The sooner you
invest, the longer your savings will be able
to grow on a tax deferred basis. A monthly
RRSP contribution plan can make this easy.
And, if you have significant unused RRSP
contribution room, a short-term loan is often
a great way to catch up.
Consider an RESP
Today, a four-year university education in
Canada costs $32,000 or more. In 18 years,
using a 5% annual inflation factor, that
number could rise to $77,000. Although
contributions to a Registered Education
Savings Plan (RESP) are not tax deductible,
the income earned in the plan grows tax-
free until it is withdrawn by the student.
Plus, you could receive up to $500 a year
in government grants to help your savings
along. Consider this option if you have
children with ambitions for higher education.
Make the right decisions all year
Tax planning means that you are entitled
to arrange your affairs, within the limits of
law, so that you pay a minimum amount
of tax. We have the knowledge, resources,
and team of experts to help you make the
right decisions throughout the year and save
money at tax time.
Tax planning means that you are entitled to arrange your affairs,
within the limits of law, so that you pay a minimum amount of tax.
Does most of your tax planning take place during
the last few months of the year? If so, you are
not alone. However, to effectively reduce your
current and future tax liabilities, tax planning
should be a year round endeavor. Here are some
opportunities.
Split your Income
Income splitting involves structuring your affairs
to move income into the hands of a lower-income
family member who will pay less tax.
• A spousal RRSP allows a higher-income
October 2006 allows the higher income
earning spouse to allocate up to 50% of their
pension income to their lower income earning
spouse where it would be taxed at their lower
marginal rate. Income eligible for income
splitting is as follows:
1. For people age 65 and older, eligible
pension income includes lifetime
annuity payments under a registered
pension plan (RPP), a registered
retirement savings plan (RRSP) or a
deferred profit sharing plan (DPSP),
consider donating publicly-traded securities
such as stocks, trust units, exchange-traded
funds, warrants etc., as well as mutual fund
units and bonds to a public charity (charitable
organization and public foundations). In doing
capital gains tax are eliminated on this gift.
This donation must be an “in kind” transfer of
the security itself, not the cash proceeds of a
sale of the security. The transfer is best made
electronically from the donor’s investment
account to the charity’s custody or
brokerage account.
Jay Schmidt
partner, jmh & co. llp
j.schmidt@jmhca.com E
403 261 0835 P
k e e p i n g r e c o r d