Hiring the wrong person or at the wrong time can cost your practice thousands of dollars before you realize what happened. For dental groups in expansion mode, staffing decisions carry even higher stakes because every hire either supports or undermines your growth trajectory.
The challenge isn’t just finding good people. It’s understanding the true financial impact of each hiring decision and building those costs into your growth budget before you need to fill the position. Many practice owners underestimate the true cost of hiring, leading to cash flow surprises that slow their expansion plans.
Working with a financial advisor for dentistscan help you anticipate these costs and structure your staffing budget to support sustainable growth. This article breaks down how to budget for hiring and onboarding so your expansion efforts don’t get derailed by unplanned personnel expenses.
Before diving into staffing budgets specifically, understanding the broader financial picture of scaling a multi-location dental practiceprovides essential context for these decisions.
Understanding the True Cost of Hiring
Most practice owners think about hiring costs in terms of salary. The actual cost is significantly higher when you factor in everything involved in bringing someone onto your team.
Beyond the Salary Number
The salary you offer represents only a portion of what a new hire costs your practice. Benefits, payroll taxes, training time, and reduced productivity during the learning curve all add to the total investment.
Research from the Dental Assisting National Board (DANB)found that the average cost of dental assistant turnover is $10,000 per position, with approximately $1,000 spent directly on hiring costs. The remaining costs include lost productivity, training time, and the burden on other team members during the vacancy.
For higher-paid positions like hygienists or office managers, the total replacement costs climb substantially higher. Industry research consistently shows that recruiting, onboarding, and productivity losses during training can equal several months of an employee’s salary.
The Hidden Cost of Vacant Positions
When a position sits open, other team members absorb the workload. According to DANB research, when a dental assistant role is vacant, about half of the tasks get delegated to another dental assistant, one quarter to the dentist, and the remainder to office managers and hygienists.
This redistribution has real financial consequences. When dentists take on tasks that assistants should handle, they’re not producing at their full capacity. The same DANB research indicates that if a dental assistant position remains open for a full year, the average cost of reassigning tasks to other staff exceeds $30,000.
These numbers underscore why proactive hiring budgets matter. Waiting until you desperately need someone means accepting both the vacancy costs and the pressure to hire quickly, which often leads to poor hiring decisions.
Staffing Costs as a Percentage of Collections
Understanding industry benchmarks helps you evaluate whether your staffing budget aligns with successful practices. These benchmarks also help you forecast personnel costs as you plan for growth.
Industry Benchmarks for Personnel Costs
Personnel costs typically represent the largest expense category for dental practices. According to the American Dental Association, overhead should remain at 63% or less of total income, with staffing being a significant component of that overhead.
Dental industry experts generally recommend keeping total personnel costs between 24% and 28% of your practice’s collections. This includes salaries, benefits, payroll taxes, and costs associated with recruiting and temporary staffing. Keeping personnel costs within this range while maintaining quality staffing requires careful planning and budgeting.
For growing practices adding locations, these percentages provide a framework for projecting staffing needs. If you’re acquiring a practice that collects $800,000 annually, you can estimate personnel costs of $192,000 to $224,000 to maintain appropriate staffing levels.
Adjusting for Growth Phases
During expansion phases, your staffing costs as a percentage of collections may temporarily exceed benchmarks. New locations typically require full staffing before they reach mature collection levels. This front-loaded investment is normal, but it needs to be planned for.
A financial advisor for dentistscan help you model these growth phase dynamics, showing how personnel percentages will normalize as new locations mature. Without this modeling, owners often panic when early-stage percentages run high and make staffing cuts that undermine the location’s ability to reach its potential.
Building a Hiring Budget for Expansion
Growing dental groups need systematic approaches to hiring budgets rather than ad-hoc decisions made when positions become urgent.
Forecasting Staffing Needs
Before you can budget for hiring, you need to project what positions you’ll need and when. This forecast should connect directly to your growth plan. If you’re adding a location, what’s the staffing model for that office? If you’re expanding hours at existing locations, how many additional team members does that require?
Your key performance indicators provide data to inform these projections. Patient volume trends, production per provider, and schedule utilization all signal when you’re approaching capacity and need additional staff.
Build your staffing forecast at least 12 months ahead. This timeline gives you room to recruit thoughtfully rather than desperately. It also allows you to budget for the associated costs and ensure stable cash flowduring hiring periods.
Calculating Total Hiring Investment
For each anticipated hire, calculate the full investment rather than just the salary:
Direct Hiring Costs
Advertising the position, background checks, drug screening, and any recruiter fees represent the immediate out-of-pocket expenses. DANB researchindicates that these direct hiring expenses average around $1,000 for dental assistant positions, though costs vary by position level and local market conditions.
Compensation Package
Beyond base salary, include the cost of benefits, payroll taxes, and any sign-on incentives. Health insurance, retirement contributions, and paid time off add meaningfully to base salary. Work with your accountant to calculate your actual benefit costs per employee.
Onboarding and Training
New hires require training time, during which their productivity is limited, and existing staff spend time away from their normal duties. Budget for reduced productivity during the first one to three months, depending on the role’s complexity.
Productivity Ramp-Up
Even after initial training, new employees take time to reach full productivity. DANB datashows it takes between 1 and 2.5 months to train new dental assistants, with entry-level assistants taking longer to get up to speed.
Onboarding Investments That Pay Off
How you onboard new hires affects both their productivity timeline and their likelihood of staying. Cutting corners on onboarding creates hidden costs that exceed the savings.
Structured Onboarding Programs
Practices with documented onboarding processes bring new hires to full productivity faster than those relying on informal training. A structured program ensures new team members learn systems consistently and don’t develop habits that conflict with your established protocols.
Investing in onboarding documentation takes time upfront but saves money with every subsequent hire. Written protocols, training checklists, and competency assessments create repeatable processes that reduce the burden on existing staff during each new hire’s integration.
The Retention Connection
Effective onboarding directly impacts retention. When new employees feel supported and clear about expectations from day one, they’re more likely to stay. Given that replacement costs for dental team members run into thousands of dollars, improving retention by even a small percentage generates significant savings.
Track your retention rates by the method of employee onboarding. If team members who received comprehensive onboarding stay longer than those who received minimal orientation, that data justifies continued investment in your onboarding program.
Managing Cash Flow During Hiring Periods
Hiring creates cash flow demands that extend beyond the first paycheck. Planning for these demands prevents growth initiatives from straining your financial position.
Timing Considerations
When possible, time major hiring pushes for periods when your practice has strong cash reserves. Seasonal patterns in dental practice revenue can inform this timing. Many practices experience slower periods in late summer and around holidays, making spring and early fall better times for expansion hiring.
For location acquisitions, factor staffing costs into your deal structure and financing. The purchase price captures the practice’s value, but the working capital required to maintain and expand staffing is often overlooked. Work with your financial advisor for dentiststo model comprehensive acquisition costs, including staffing.
Reserve Requirements
Maintain cash reserves specifically allocated for staffing transitions. This reserve provides a buffer against unexpected turnover and lets you pursue growth opportunities without cash flow anxiety.
A reasonable staffing reserve equals three to six months of total personnel costs. This buffer ensures you can handle simultaneous turnover situations or extend your search for the right candidate without financial pressure to accept a poor fit.
When to Bring in Professional Guidance
Staffing decisions interact with tax planning, entity structure, and overall financial strategy. Practice owners benefit from professional guidance that connects these elements.
Signs You Need Support
Consider working with a financial advisor for dentists when staffing decisions become complex. Adding multiple positions simultaneously, expanding to new locations, or restructuring compensation packages all warrant professional input.
Suppose your personnel costs consistently exceed benchmarks without clear justification. In that case, professional analysis can identify whether you have a staffing efficiency issue, a production problem, or simply unrealistic expectations based on your growth phase. Watching forsigns your practice is losing financial controlhelps you address issues before they become critical.
What Advisors Provide
Fractional CFO serviceshelp you model staffing scenarios, project cash flow impacts, and structure compensation competitively while maintaining profitability. They bring perspective from working with multiple dental practices and can benchmark your staffing costs against similar organizations.
Financial advisors also help you avoidfinancial warning signsthat often emerge from poorly planned hiring. Overstaffing during slow periods, understaffing that limits production capacity, and compensation structures that don’t align with revenue all create problems that professional guidance can prevent.
Frequently Asked Questions
How much should I budget for hiring a new dental assistant?
Beyond salary, budget approximately $10,000 for the total cost of bringing a new dental assistant onto your team, according to research from the Dental Assisting National Board. This includes direct hiring expenses, training time, reduced productivity during onboarding, and the burden on existing staff during the transition. Actual costs vary by location and the length of time the position remains vacant before being filled.
What percentage of collections should go toward staffing costs?
Industry benchmarks suggest personnel costs should range from 24% to 28% of collections. This includes all compensation, benefits, payroll taxes, and staffing-related expenses. During growth phases, this percentage may temporarily run higher as new locations staff up before reaching mature collection levels.
How can a financial advisor help with hiring decisions?
A financial advisor for dentists helps you model the cash flow impact of hiring decisions, ensure compensation packages align with your financial capacity, and project how staffing costs will evolve as you grow. They also help you benchmark against industry standards and identify when staffing costs indicate broader operational issues.
How long does it take for a new hire to become fully productive?
Most dental team members reach full productivity within two to four months, depending on their role and experience level. DANB researchindicates it takes between one and 2.5 months to train new dental assistants, with entry-level assistants requiring more time. Budget for reduced productivity during this ramp-up period when calculating total hiring costs.
What’s the cost of leaving a position unfilled too long?
Vacant positions create substantial hidden costs. When a dental assistant position remains open, other team members take on additional responsibilities, reducing overall efficiency. DANB researchshows that if a dental assistant role stays vacant for a full year, the cost of redistributing tasks to other staff averages over $30,000, not counting lost production from the dentist taking on assistant duties.
Building Staffing Budgets for Sustainable Growth
Hiring and onboarding represent significant investments that directly impact your practice’s ability to grow profitably. Understanding the true costs involved allows you to budget realistically and avoid cash flow surprises.
The practices that scale successfully treat staffing as a strategic function rather than an administrative task. They forecast needs in advance, budget comprehensively, and invest in onboarding that accelerates productivity and improves retention.
Working with experiencedfinancial advisors for dentistshelps you build staffing budgets that support your growth trajectory while maintaining the financial health that makessuccessful scalingpossible.
Ready to build a staffing budget that supports your growth plans? Connect with Duckett Ladd’s teamto discuss how financial planning can strengthen your hiring and expansion strategy.
