dentaladvisory group

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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

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FocalPoint Coaching Inc.1801 8 Street SW

Calgary, Alberta T2T 2Z2

p 403.585.9601 f 403.648.2902

www.focalpointcoaching.com

JMH & Co. LLP400, 900 - 6 Avenue SW

Calgary, Alberta T2P 3K2

p 403.261.0835 f 403.262.4281

www.jmhca.com

ScotiaMcLeodSuite 300, 119 6th Avenue SW

Calgary, Alberta T2P 0P8

p 403.298.4000 f 403.298.4001

www.scotiamcleod.com

Miller Thomson LLP700 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

dental advisory group 3

c o a c h ' s c o r n e r

Patterson DentalJohn 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. LLPJay 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.

ScotiaMcLeodGreg 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 LLPDean 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.

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Strategic “Navigational Coaching” Skills Can Grow Your PracticeCoaching 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 Lipovskileadership coach & program facilitator,

focalpoint corporate coaching inc.plipovski@focalpointcoaching.com E

403 355 2746 P403 585 9601 C

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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 ExpireIf 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 ExtendIf 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 llpE dbarrett@millerthomson.comP 403 298 2427

Darren Smits associates, miller thomson llpE dsmits@millerthomson.comP 403 298 2409

John Vander Veldenbranch manger, patterson dental - calgaryjohn.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

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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 Kraminskydirector, wealth management, scotiamcleod - the cm groupsenior wealth advisorE greg _ kraminsky@scotiamcleod.comP 403 298 4075

Colin Andrewssenior wealth advisor, scotiamcleod - the cm groupE colin _ andrews@scotiamcleod.comP 403 298 4026

Steven Molinawealth advisor, scotiamcleod - the cm groupE steve _ molina@scotiamcleod.comP 403 298 4015

s t r a t e g i c w e a l t 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 SecuritiesIf you are considering a charitable donation,

Often new income generated by new technological procedures can indeed finance other equipment upgrades.

Tax-Free Savings AccountThe 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 debtTax 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 RRSPYour 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 RESPToday, 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 yearTax 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 IncomeIncome 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 Schmidtpartner, jmh & co. llp

j.schmidt@jmhca.com E403 261 0835 P

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