5 Major Financial Threats To The CEO Optometrist in Private Practice
This is an introduction to a 5-part series on the 5 Major Financial Threats To The CEO Optometrist in Private Practice. As many independent practice owners understand, owning your own practice offers many rewards, but with these rewards come certain threats. To protect your practice rom the exposures it faces, it’s crucial to identify these threats and develop a plan.
In this series, I will go over the 5 major financial threats to your practice.
1. Not paying yourself first
As a small business owner, you may want to pay yourself last to conserve money, but sometimes putting yourself first is the trick to succeeding.
With so many business expenses to pay for your practice- utilities, rent, inventory, staff wages, marketing — it can be hard to fit your own salary in. And as a small practice owner, you may assume you should put everything you make back into the business. Not so. The first thing you should do with your money is pay yourself first.
Many practice owners feel like paying themselves is a luxury; however, it is a necessity for the success of your business. In this section of the series, I’m going to go over why you deserve to pay yourself first and how to do it.
2. Dependence Vision Plans
Vision plan reimbursements is the bread and butter of most private Optometry practices. Many practices would go out of business if they lost their contract with some of the largest vision plans out there. While, these plans do bring patients into the practice, sometimes I wonder at what cost?
Imagine having a practice where Vision Plan reimbursements were just surplus income! What if you didn’t have to depend on these plans for your practice’s financial well-being? What if you could make the decision to cut them out when ever you wanted to without affecting your profits? That’s every practice owners dream, right? But is it realistic? Can you really have that dream?
Well, In this section of the series, I’m going to discuss how you can develop a strategic plan to become less dependent on vision plans and take control of your practice’s financial future.
3. Failure to track business performance
In my experience working with clients in my CEO of YOU™ business consulting, failure to track is the biggest challenge for many private practice owners. 90% of my clients didn’t tract any performance metrics before they signed up for consulting. In fact, most of them didn’t even know they needed to track anything at all. Scary, isn’t it?
Measuring performance metrics is VERY important because metrics are key to evaluating the overall health of your practice. A good performance metric will help you see patterns of behavior in your practice. Once you understand these patterns, you will be able to make effective plans for improvement.
When you track your numbers, you will see the truth as it is not as you wish to see it, because numbers don’t lie. Understanding the story behind your numbers is powerful. It’s powerful because it will put the wheel that drive your practice in your hands and not in the hands of chance or wish.
In this section of the series, I’m going to tell you what Key Performance Indicators you should tract for your practice and how.
The Cambridge dictionary defines overspending at the act of spending more money than you have or more than was planned or agreed. Do you have a budget for your practice? Do you know where your money is coming from and where it’s going? Most practice owners have not idea! So, if you answered no to these questions you’re not alone.
A practice without a budget is at risk for a host of financial problems down the road. This is true for practices of all ages and sizes. A practice that doesn’t know where its money is coming from or where it is going to isn’t in a position to make a profit, take advantage of investment opportunities or even make long-term commitments to patients.
Conversely, a practice with a detailed business budget can create a road map for financial success and opportunities to expand.
In this section of the series on financial threats, I will go over why creating a budget is crucial to your success and give some tips on how to create a “common sense” budget.
5. Production Burden
In general, the cost of production is defined as the total price paid for resources used to manufacture a product or create a service to sell to consumers including raw materials, labor, and overhead.
For a business owner, knowing their cost of production is a vital step in creating and maintaining a profitable business. In Optometry, we call this “Chair Time Cost”. By knowing the cost of your chair time, you can optimize production processes, delivery schedules, and general practice activities in an effort to improve service and product delivery efficiently.
In this section of the series, I will go over how to calculate your chair time properly to ensure profit and practice efficiency.
Over the next few week, we’re going to explore those five financial threats to your practice and how you can prepare for them. In your opinion, which of the them do you think poses the highest threat to the success of your practice? Write your answers in the comment section below. Let me hear what you think!
Until then, remember to Dream Big, Take Risks and become the CEO of You™!
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