buildmymedicalpractice
buildmymedicalpractice
Hi everybody, it's Dr. Muth from the "15k a Day Doc". I want to talk to you today about budgeting for a successful practice. Everybody is concerned about a budget, right? We need to be able to have enough money to float during the hard times and during the good times.
I find that a lot of practices don't know what their overhead expenses are, where their overhead is going and they're not sure how to get control over it.
This is a really important thing because if you can't control your overhead, you can't control your profit. In that situation you don't know how much money you have to make each month in order to pay your bills, pay yourself, and have profit at the end of the year.
The rule of thumb is to average 50% of your collections to your overhead. Overhead includes rent, insurance, employees, supplements, lab costs and yes also your salary. You should be paying yourself a salary. Remember technically you're self-employed if you own a business but you want a business not just a job.
Dividend income is seperate than you W2 income. You can take dividened income on top of your W2 income. If you don't pay yourself W2 income determing the business worth is not going to be accurate. How you look at the bottom line of profit is going to be very different because you never backed out your salary out of those finances.
Pull up your QuickBooks file and categorize all your expenses and do this regularly.
Print a profit and loss report and look through every expense. There are going to be expenses you don't remember having especially those on auto draft. If you no longer need them terminate the service. If some things look like they are more than they should be paying then see if you can renegotiate the expense.
There are going to be some things that are just the way they are like medical malpractice. It's just the way it is. We can't negotiate that, but everything else is negotiable as far as I'm concerned.
I had a time in my practice where my credit card expenses were really high every month. I couldn't figure out what was going on. We had never had these kinds of expenses before. But we had somebody new doing our ordering and when we took a look at what she was ordering, it was from the most expensive places. She wasn't shopping around to find the best deal on supplies that we needed. She was ordering supplies that we didn't need, and enough to last us five years on some things. Other thing she wasn't ordering enough of. We had to really sit down with her and edicate her how to order.
We assume as business owners that everyone knows or thinks about things the same way we do, but our employees really don't have the knowledge that we have. In order to have a great team we need to train them and share our knowledge with them.
Know your overhead expenses |
Look at your expenses and realize where are they too high |