Profit First: A Financial Strategy to Transform Your Optometry Practice

In today’s fast-paced business world, maintaining a profitable optometry practice can be a daunting task. Expenses can quickly add up, and if you’re not careful, your practice may start to feel like a constant game of catch-up. However, there’s a simple and effective financial strategy that can help you turn your business around: Profit First.

What Is the Profit First System?

Created by Mike Michalowicz in his best-selling book Profit First, this financial strategy flips the traditional business accounting formula on its head. Rather than focusing on sales minus expenses equaling profit (Sales – Expenses = Profit), Profit First teaches us to prioritize profitability by setting aside profit first:

Sales – Profit = Expenses

In the Profit First formula, profit is no longer the last thought after expenses are paid. Instead, you take a percentage of every sale as profit right from the start. This simple shift in mindset can make a huge difference in how you manage your finances and can transform your practice’s profitability.

Why Profit First Works

At its core, Profit First leverages the concept of “Parkinson’s Law,” which states that work expands to fill the time available. In business terms, expenses expand to match the revenue available. By taking profit off the top, you reduce the money available for expenses, which forces you to run a leaner, more efficient operation.

The beauty of Profit First is that it teaches business owners to make profit a priority, rather than an afterthought. By prioritizing profitability, your business becomes more financially stable, and you, as the practice owner, can achieve financial peace of mind.

Practical Tips for Implementing Profit First in Your Optometry Practice

Here’s how you can implement the Profit First system in your optometry practice, step by step:

1. Open Multiple Bank Accounts

One of the most practical tips from Profit First is to set up multiple bank accounts to allocate funds for different purposes. Michalowicz suggests having five core accounts:

• Income: All revenue from your practice flows into this account.
• Profit: A percentage of your income is transferred here, representing the profit you’re prioritizing.
• Owner’s Pay: As the business owner, you should be compensating yourself fairly for the work you put into your practice.
• Taxes: Set aside money for taxes so that you’re not caught off guard when tax season arrives.
• Operating Expenses: The remaining money goes here, and this is what you use to cover your practice’s day-to-day expenses.

Example:

Dr. Emily, an optometrist running a small private practice, struggled with cash flow. She implemented Profit First by setting up her five accounts. Each time her practice brought in revenue, she allocated 10% to profit, 40% to owner’s pay, 20% to taxes, and the rest for operating expenses. Over time, she noticed that her practice was running more efficiently, and she no longer had to dip into her personal funds to cover unexpected expenses.

2. Start with Small Percentages

At first, you might find it difficult to allocate a large percentage to profit. That’s okay! Start small. Even putting 1% of your income toward profit can make a difference. As your practice grows and becomes more efficient, you can increase the percentages.

3. Cut Expenses and Increase Efficiency

When you allocate your funds to profit, owner’s pay, and taxes first, you’ll have less left over for operating expenses. This forces you to evaluate where your money is going and cut unnecessary expenses. Ask yourself, “Is every dollar spent necessary to the growth of my practice?”

Example:

Dr. Sarah, another optometrist, was spending heavily on marketing tactics that weren’t generating enough patient leads. By switching to the Profit First system, she had to reevaluate her marketing spend and shift her focus to more effective strategies, like patient referral programs and local partnerships, which helped her reduce costs and improve her return on investment.

4. Celebrate the Wins

Every quarter, take a portion of your profit and use it to reward yourself or reinvest in your practice. This could be anything from upgrading equipment to taking a well-deserved vacation. Celebrating these wins keeps you motivated and reinforces the importance of prioritizing profit.

Why Profit First Matters for Women in Optometry

Many women optometrists tend to prioritize patient care over the financial well-being of their practice. While providing excellent care is critical, it’s also essential to maintain a financially healthy business. Profit First allows you to focus on both—ensuring your practice is thriving while you continue delivering top-tier service to your patients.

Moreover, as a woman in a traditionally male-dominated industry, achieving financial success and stability can serve as a source of empowerment. By following Profit First, you’re not only creating a more profitable practice, but you’re also setting an example for others to follow.

Inspirational Quote:

“Financial freedom is available to those who learn about it and work for it.” – Robert Kiyosaki

Key Takeaways

• Profit First Formula: Change your mindset from “Sales – Expenses = Profit” to “Sales – Profit = Expenses”.
• Multiple Bank Accounts: Separate accounts for income, profit, owner’s pay, taxes, and operating expenses.
• Start Small: Begin by allocating a small percentage to profit and increase over time.
• Cut Expenses: Be intentional about reducing unnecessary costs and increasing efficiency.
• Celebrate Your Wins: Regularly reward yourself and reinvest in your practice with the profits you save.

Call to Action: Join Optometry Divas for Financial Success

At Optometry Divas, we understand the challenges you face as a practice owner and a professional. That’s why we’re committed to helping women optometrists achieve financial success through tools like the Profit First system.

If you’re ready to take control of your practice’s finances, join us today! We offer resources, workshops, and a supportive community to guide you on your journey to financial freedom.

Click HERE to join the Optometry Divas community, and start applying Profit First Principle to your practice success!

References

• Michalowicz, Mike. Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine. Penguin, 2017.
• Siegell, R.  Profit First for Optometrists: Amazon, 2024.
• Kiyosaki, Robert T. Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! Warner Business Books, 2000.
• “How to Implement the Profit First System.” Profit First Professionals, profitfirstprofessionals.com.
• Justin, L (2024). “Pay Yourself First.” OptometryDivas.com/pay-yourself-first

Disclaimer

This blog provides general information on the subject matter and is not a substitute for professional advice. If you have concerns about your business’s financial health, please consult a qualified professional.