Industry Sector: Dental Lab

You have decided that you want to run a dental lab - now decide how you will achieve this. Will
you:

buy an existing business

start up a new business from scratch

The course of action you choose will affect the costs you will incur and may also affect how
soon you start to receive income from the venture.
This Bizguide will help you to complete your cash flow. The topics listed under Income and
Expenditure relate to fields in the cash flow section of the Business Plan.

Cash sales
'Cash sales' means all income from your main business activity which is received at the time of
sale. Although some customers may pay you in cash, remember that Cash sales can also include
cheques and card payments.
To prepare your cash flow, the first step is to estimate how much income you will receive over
the next 12 months from the manufacture of dental appliances and any related services you will
provide. Then decide how much of this income will be Cash sales and how much will be income
you receive from customers that you invoice and who pay you some time later. It is likely that
most of your customers will have an account with you and the payments you receive from them
will be entered in 'Cash from debtors' in the cash flow.
There are a number of things to consider when you make your estimates:

Type of business

who will be your customers. Will you be targeting local dental practices or offering a
mail order service to a national market

will you be offering specialist services to other labs

where will your premises be and how big will they be. You will need to have large
enough premises to house all your equipment and you may want to be located in a town
or city centre so you are near a number of dental practices

how will you advertise your services

do you have the necessary skills, training and experience? Bear in mind that statutory
registration for dental technicians is now compulsory. For admission to the register you
either have to hold a recognised qualification, or demonstrate that you have several years
experience

will you have problems recruiting skilled technicians - the dental laboratory sector is
currently suffering from a shortage of skilled personnel

Your services

what range of work will you undertake

will you specialise, for example in crown and bridge work or in denture work, or will you
offer a full service

will you offer a delivery and collection service

how will you keep track of each job

will you put some work out to other laboratories

where will you source your raw materials from

how will you monitor productivity and quality

how will you monitor wastage and remakes

will you be able to sell any scrap or waste

Give some thought also to:

what sector of the market you are targeting - will you accept NHS work or will you target
the dental practice which mainly deals with private or independent patients

whether you are likely to have approximately the same amount of work all year round, or
whether you will get seasonal lulls and surges. Many labs are very busy in the run up to
Christmas

Pricing

what will be your pricing policy (don't forget, you must be able to cover your costs,
overheads and drawings)

will you have separate tariffs for NHS, private and independent work

will you have fixed tariffs or will you quote for precious metals separately

how often will you review your prices

will you offer discounts

Be aware that:

if you depend on only a few major customers they will be in a strong position to beat you
down on price

many dental practices take a long time to pay their bills

Competition
Because barriers to entry have traditionally been low, it has been relatively easy for people to set
up a dental laboratory and this has led to overcapacity and keen competition within the industry.
The position has been made worse by dental practices choosing to get dental appliances made
abroad, in order to cut costs.
To compete effectively in this market place it's vital that you offer your customers a high quality,
speedy and reliable service at a reasonable price. Achieving a quality standard such as DAMAS
or ISO 9002 is likely to help you to win better quality and more highly paid work.
To help with your decisions, click on the checkpoints for guidance. Once you have worked out a
Cash sales figure add it to the relevant field in your cash flow forecast.

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Executive Summary
Dental Laboratory is being established with the goal of providing dentists with restorations of
superior quality and value. We offer all the state-of-the-art esthetic materials. Our product quality
and services are excellent.
At our Dental Laboratory, we recognize that every practice is different... and every doctor is
unique. We will take the time to listen to casework problems. Examine the doctor's individual
situation. In short, we reach a full understanding of their needs before we recommend a solution.
Then, working as their partner, we put our extensive resources to work for them.
The result is creative and practical solutions to their casework needs on a consistent basis. All
backed by over twenty-five years of experience and an investment in the techniques that
enhance patient care quality like Procera, Targis, Vectris, Empress & Empress 2, as well as all the
premier implant systems. At Wright's Dental Laboratory, our products and services are a valuable
complement to well-established restorative treatment plans that promote aesthetics, tooth
reinforcement and conservative preparation techniques.

1.1 Keys to Success

The keys to success for Wright's Dental Laboratory are:
1. Our dental laboratory must continually adjust its methods to meet the constantly evolving
challenges of dentistry and aspirations of the dental professional.
2. Our dental laboratory must be deeply and loyally committed to maintaining
CONSISTENT product excellence.
3. Our dental laboratory's only dynamic resource is people. It must develop opportunities
for each person to use his/her abilities to the utmost of their potential.

1.2 Objectives
The objectives of Dental Laboratory are as follows:

Increase sales significantly each year.

Increase the number of dentists using lab services aggressively each year.

Expand service area to include the entire Israel area.

Company Summary
Dental Laboratory offers state-of-the-art dental restorations services to dental professionals.
Charles Wright attended State University in Oregon and is a certified dental technician. He
entered the dental laboratory industry in 1994 and by 2000 he had established his own small
dental laboratory. Charles now joins his expertise with that of his brother, David, to create
Dental Laboratory. The synergy of their respective talents will allow the precision restorative
capabilities of Wright's Dental Laboratory to consistently provide leading-edge technologies and
a high index of progressive services to the profession in Monroe.
As an advocate of continuing dental education, Mr. Wright's commitment to continuing
education is illustrated by his involvement with metal-free restorations. Charles has successfully
completed training in such state of the art techniques as Empress & Empress 2 and
Targis/Vectris. He has also completed training for all the premier implant systems including
Paragon, Sulzer-Calcitek, Steri-Oss, Nobel BioCare, 3i, and ITI.
Among his accomplishments, Charles has held the posts of vice president, secretary and treasurer
of the Oregon State Dental Laboratory Association. Additionally, he is a member of the National
Association of Dental Laboratories (NADL), the Oregon State Dental Laboratory Association
and the American Academy of Cosmetic Dentistry (AACD).

David Wright attended State University and is a certified dental technician. He has spent over ten
years working with some of the region's most respected practitioners. David is committed to
continuing education and has successfully completed Productivity Training Corporation's
Advanced Crown & Bridge Dental Studies. He has also successfully completed training in all the
premier implant systems including Paragon, Sulzer-Calcitek, Steri-Oss, Nobel Biocare, 3i and
ITI.
David entered the dental laboratory industry in 1991. He began his training under the tutelage of
his father with various phases of fixed and removable techniques. Over the years, David
completed his training to become fully proficient in the design and fabrication of precision
attachment restorations, implants and full mouth rehabilitation cases.

2.1 Start-up Summary

The start-up cost of Wright's Dental Laboratory will consist primarily of equipment. Charles and
David will each invest personal funds and also secure a long-term loan.

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Insurance
Rent
Lab Setup
Office Setup
Expensed Equipment
Total Start-up Expenses
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

Total Requirements

2.2 Company Ownership

Wright's Dental Laboratory, located in a custom designed, 8,000 square foot facility using the
latest, state-of-the-art restoration production systems and compterized case tracking, is owned by
Charles and David Wright. The company will operate as a general partnership with both Charles
and David performing management functions.
Wright's Dental Laboratory offers the following products:
CROWN AND BRIDGE
Ceramics

Cristobal+

Targis

Porcelain to metal

Cristobal+ inlay/onlay

Targis inlay

Porcelain veneers

Cristobal+ to metal

Targis Vectris

Dentures & Partials

Splints/Stents

Orthodontics

Full dentures

Thermo-Splint

Partial dentures

Hard splint (night guard)

Night guards

Implant stent

Relines

Sports guard

Laser welded repairs

Surgical template

Soft liners

Bleaching fluoride trays

Procera
Enamelux
Empress
In-Ceram
In-Ceram zirconia
REMOVABLES

Ivocap

Market Analysis Summary

The Monroe tri-county area has over 300 dentists. Next to salaries and benefits for associates,
assistants and hygienists, dental laboratory fees are a dentist's greatest expense.
Currently, there are seven dental labs in Monroe. Of the seven, only four are full service. Most
importantly, a new lab has not opened in the Monroe area in the past six years. Over the past six

years, the area's population has grown tremendously. The current labs have not invested in the
newest technology. Wright's Dental Laboratory will set a new standard for products and services.
No where is this more important than in the dental care for children and seniors. The new
materials and techniques creates more options for dentists to serve their young and senior
patients. Wright's Dental Laboratory is investing heavily in these new techniques and materials.

4.1 Market Segmentation

Wright's Dental Laboratory will focus on dental professionals who work in the following three
areas:

Dental services for seniors;

Dental services for children;

General dental services.

Market Analysis
Potential Customers
Dental Services for Children
Dental Services for Seniors
General Dental Services
Total

Strategy and Implementation Summary

Wright's Dental Laboratory will aggressively pursue dental professionals in the Monroe area by
offering discounted services to encourage them to try the new lab. Charles Wright will manage
the marketing campaign to promote the business. He has extensive contacts in the dental
community that will be critical to the building of the business.

5.1 Sales Strategy

The sales strategy will focus on offering dental professionals the new techniques and equipment
that will assist them in serving their speciality populations (i.e. children and seniors).

5.1.1 Sales Forecast

For the first month there will be no sales, as the company will be establishing its operations. We
anticipate that sales will grow quickly during the second and third month of operation.
The following is the sales forecast for three years.

Sales Forecast
Sales
Dental Products
Other
Total Sales
Direct Cost of Sales
Dental Products
Other
Subtotal Direct Cost of Sales

Management Summary
The management team for Wright's Dental Laboratory will be Charles and David Wright. Charles
will be responsible for marketing, sales, customer r elations. David will be responsible for
managing the dental lab operation.

6.1 Personnel Plan

The personnel plan for Dental Laboratory is as follows:

Marketing/sales manager;

Lab manager;

Lab techs (4);

Customer service (1).

Part way through the second year of operation it is estimated that the Lab will have to hire an
additional customer service operator.
Personnel Plan
Marketing/Sales Mgr
Lab Mgr
4 Lab Techs
Customer Service
Total People

Year 1
Year 2
Year 3
48,000 50,000 52,000
48,000 50,000 52,000
144,000 152,000 160,000
24,000 38,000 60,000
7
7
7

Total Payroll

264,000 290,000 324,000

Appendix
Sales Forecast
Sales
Dental Products
Other
Total Sales
Direct Cost of Sales
Dental Products
Other
Subtotal Direct Cost of Sales

0%
0%

Personnel Plan
Month Month Month Month Month Month Month Month Month Month Month
Month 12
1
2
3
4
5
6
7
8
9
10
11
Marketing/Sales
Mgr
Lab Mgr
4 Lab Techs
Customer
Service
Total People
Total Payroll

0% 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
0% 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
0% 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
0% 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
7

22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000

General Assumptions
Plan Month
Current Interest
Rate
Long-term Interest
Rate
Tax Rate
Other

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11
1
2
3
4
5
6
7
8
9
10
11

Month 12
12

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

Pro Forma Profit and Loss

Sales
Direct Cost of
Sales
Other Production
Expenses
Total Cost of Sales

30,000

30,000

Month Month Month Month Month Month

Month 12
6
7
8
9
10
11
40,000 40,000 50,000 60,000 65,000 70,000 70,000 80,000 80,000

12,000

12,000

15,000 15,000 18,000 21,000 22,000 25,000 25,000 28,000 28,000

12,000

12,000

15,000 15,000 18,000 21,000 22,000 25,000 25,000 28,000 28,000

Gross Margin
Gross Margin %

0
0.00%

18,000
60.00%

18,000
60.00%

25,000 25,000 32,000 39,000 43,000 45,000 45,000 52,000 52,000

62.50% 62.50% 64.00% 65.00% 66.15% 64.29% 64.29% 65.00% 65.00%

22,000

22,000

22,000

22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000

2,000

2,000

2,000

2,000

2,000

2,000 2,000 2,000 2,000 2,000 2,000 2,000

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

31,400

31,400

31,400

31,400 31,400 31,400 31,400 31,400 31,400 31,400 31,400 31,400

Month 1 Month 2 Month 3 Month 4 Month 5

Expenses
Payroll
Sales and
Marketing and
Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
15%
Other
Total Operating
Expenses
Profit Before
Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit

(31,400) (13,400) (13,400) (6,400) (6,400) 600

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

1,000
0
500
600
2,000
3,300
0

7,600 11,600 13,600 13,600 20,600 20,600

(30,400) (12,400) (12,400) (5,400) (5,400) 1,600 8,600 12,600 14,600 14,600 21,600 21,600
833
833
833
1,000 1,156 1,146 1,136 1,126 1,115 1,105 1,095 1,084
(9,670) (4,270) (4,270) (2,220) (2,267) (164) 1,939 3,142 3,745 3,748 5,852 5,855
(22,563) (9,963) (9,963) (5,180) (5,289) (382) 4,525 7,332 8,739 8,746 13,654 13,661

Net Profit/Sales

0.00%

-33.21% -33.21% -12.95% -13.22% -0.76% 7.54%

11.28% 12.48% 12.49% 17.07% 17.08%

Pro Forma Cash Flow

Month
10

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month
11

Month 12

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from
Operations
Additional Cash Received
Sales Tax, VAT, HST/GST
0.00%
Received
New Current Borrowing
New Other Liabilities
(interest-free)
New Long-term Liabilities
Sales of Other Current
Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from
Operations
Cash Spending
Bill Payments
Subtotal Spent on
Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST
Paid Out
Principal Repayment of
Current Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities
Principal Repayment
Purchase Other Current
Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

0
0

7,500
0

7,500
750

10,000 10,000 12,500 15,000 16,250 17,500 17,500 20,000 20,000

22,500 22,750 30,000 30,250 37,750 45,125 48,875 52,500 52,750

7,500

8,250

32,500 32,750 42,500 45,250 54,000 62,625 66,375 72,500 72,750

20,000 20,000 0

0
0
0

0
0
7,500

0
0
8,250

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
52,500 52,750 42,500 45,250 54,000 62,625 66,375 72,500 72,750

Month
10

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month
11

Month 12

22,000
(437)

22,000
250

22,000
20,057

22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000

17,247 25,374 22,569 30,852 35,775 35,961 41,450 38,533 46,536

21,563

22,250

42,057

39,247 47,374 44,569 52,852 57,775 57,961 63,450 60,533 68,536

1,233

1,233

1,233

1,233

1,233

1,233

1,233

1,233

0
0
21,563

0
0
22,250

0
0
42,057

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
39,247 48,607 45,802 54,085 59,008 59,194 64,683 61,766 69,769

(21,563) (14,750) (33,807) 13,253 4,143 (3,302) (8,835) (5,008) 3,431

50,137 35,387 1,580
14,833 18,976 15,674 6,839 1,831 5,262

1,692
6,954

10,734 2,981
17,687 20,668

Pro Forma Balance Sheet

Assets

Starting Balances

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets

71,700
0
10,000
12,000
93,700

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets

80,000
0
80,000

Total Assets

173,700

Liabilities and Capital

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

0
0
0
0

Long-term Liabilities
Total Liabilities

100,000
100,000

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

150,000
(76,300)
0
73,700
173,700

Net Worth

73,700

Organizations can divide employees' share of gains as follows:

Percent of income-The bonus pool translates into a percentage of salaries, with
each employee receiving an equal percentage of compensation. This method is
used in about 75 percent of the plans.
Equal shares-Every employee receives the same dollar amount.
Hours worked-The bonus is paid in terms of dollars per hour worked and applied to
employees accordingly.

Who will participate?

What performance measures will be used?
Against which baseline will performance be compared?
How will a gain be determined and distributed?
How will the scheme be implemented?
When will the arrangement be reviewed?
You must establish a mechanism to divide the gains among the workforce.
Three options are available:
- Equal shares for all employees
- Earnings based shares
- Hours worked based shares

Sample Gainsharing Schemes

Example 1
1 All employees except senior management are involved in the Gain-sharing
scheme and all receive an equal payment regardless of position or basic salary.
2 The scheme is based on the plant as a whole meeting targets for four key
metrics:
Direct labour productivity (wage cost of operators/QC Inspectors as a percentage
of the sales value of what was produced);
Cost of quality (cost of scrap, rework, returns, etc.)
On time deliveries
Number of customer complaints
3 For each of the above metrics, a target is set for the quarter. This target is set
exclusively by management and is not subject to negotiation. However, it is
important that the targets are reasonable and as such Management put a little
stretch in each successive period but if the current target is not reached they
keep it as it is.
4 When they prepare the financial plan for the year, they budget the amount to
be paid out, per quarter, through the scheme. Again, management sets this
figure.
5 If the workforce meets the targets set, then management will pay out the
amount set aside in the budget, divided equally among all qualifying
employees. The amount is subject to tax and PRSI in the normal manner.

6 Currently, each employee in the scheme can earn 50 per quarter (gross) if the
targets are met. Management intends to increase this amount as the financial
position of the company improves.
7 In terms of making payments to the staff, all the amounts are accumulated
throughout the year and paid out at Christmas.
8 When the scheme was devised, it was intended to be simple and easy to
operate. The company did not want to create an administrative workload of
any significance in administering the scheme.

An improshare plan is a type of gainsharing plan which is based on a mathematical

formula that compares a baseline of performance (is based largely on the technical
knowledge, personal experiences and collective wisdom that are kept by individual
contributors and as a whole establish a considerable knowledge base) with actual
productivity during a given period.