[00:00:07] Again, these are numbers that sometimes we might want to avoid because it’s like, Ooh, that sounds like a number I don’t want to know. But if you’re looking at finding your ideal numbers and making things better, you need to understand what is happening now.
Welcome to the Money Skills For Therapists podcast, where we answer this question How can therapists and health practitioners go from money shame and confusion, to feeling calm and confident about their finances and get money really working for them in both their private practice and their lives? I’m your host Linzy Bonham therapist turned money coach and creator of the course Money Skills For Therapists.
Hello and welcome back to our special mini podcast, Money Skills for Group Practice Owners. Now this podcast is for folks who own group practices, in celebration of the doors opening to Money Skills for Group Practice Owners. This is a brand new course that is starting in June. It’s a six month course that’s all about helping group practice owners become the empowered financial leaders of their practice. And today’s podcast episode, and the next one that’s going to come out as well, are completely focused on group practice. So you’re welcome to listen in, if that’s not you there’s still lots of things here that are going to be relevant for solo practice, but we are really going to be getting into that next level of complexity for group practice that is part of running group practice and what can make group practice so much more challenging than solo practice.
So last time we talked about the idea of your group practice as a machine. That idea that your group practice is a machine with all these different parts and components and you might not have thought about that as you were building it. Often the decisions that we make on the fly as we’re building things, it’s like somebody comes in and they ask for a certain fee split and you’re like, I don’t know, that sounds good. Ends up becoming your default fee split. And there’s a part of your machine that you’ve just built without necessarily intentionally making it a certain way. Now, one part of your machine is in place, and there are many, many parts like that, that come together to give you certain financial results from your group practice. If you have built your group practice machine wrong, no matter how many clients your practitioners see, you’re never going to see the financial sustainability that you’re looking for.
So today I want to talk about finding your ideal numbers for your group practice. Every group practice has its own set of ideal numbers, and those ideal numbers are not just about like what’s going to make the most money. That’s not the purpose of business. I want to say that maybe that’s the purpose of business in a very like capitalistic view, but I don’t think that’s why you’re in group practice. I know that’s certainly not why I’m in business. The purpose of business is to help you to generate money from doing what you love in a way that aligns with your needs and your values. And that is this beautiful opportunity that you have with your practice by figuring out your ideal numbers and how to hit all the right sweet spots. So group practice leadership is actually a role that you want to stay in long term, not something that you’re waiting to get out of as soon as possible, waiting to sell your group practice. So let’s talk about what figuring out those ideal numbers for your group practice actually looks like.
The first thing that you need to do is understand the current state of your numbers. We need to start where you are. How much does it cost to run your group practice? Getting into your numbers and deeply understanding what’s happening in your group practice is so important and it can be a step that people want to skip. When I’ve worked one on one with folks, this is like really the step that I start at if I can see that they don’t know their numbers. The first thing you need to do is really get acquainted with these numbers and understand how are things working now. That’s really going to help you start to see what is not working. So how much does it cost to run your group practice would be one piece. How much are you paying in overhead? How much is your rent? How much is your admin team? How much are you paying your practitioners? How much does each employee cost you? Not just in terms of those wages that you’re paying to the folks, your income-generating folks, the therapists who are working with you, or health practitioners, but also in terms of the benefits that you pay for them, the trainings that you offer to them through their work with you, how much is each employee costing you and how much they’re making you is that second really important part of the puzzle. Sometimes that number can be really surprising for folks, and sometimes that number immediately shows you why it might feel like your machine is broken and your group practice is not working is how those numbers are shaking out of what folks are bringing in the door and then what it’s costing you to employ them and manage them and take care of them.
The next piece – and this is one that a lot of group practice owners want to skip and ignore – is how much are you getting paid for your leadership work? With this, I am not talking about your clinical time. I’m not talking about the clients that you’re still seeing and that revenue that it’s bringing in and that part of your paycheck. But I’m talking about how much you’re getting paid for the time you spend managing your staff, hiring and training them, setting a marketing strategy for your practice, networking and promoting your practice in your community, making big picture decisions about your business. I’m talking about your leadership. How much are you being paid for that time that you spend doing leadership work? Sometimes the answer to this is $0 or very, very little. Sometimes you might do the math on this and realize you’re getting paid $10 an hour or $50 an hour. And that’s really helpful information. Again, these are numbers that sometimes we might want to avoid because it’s like, ooh, that sounds like a number I don’t want to know. But if you’re looking at finding your ideal numbers and making things better, you need to understand what is happening now.
Finally, how much do you need to be setting aside for taxes? You can look at, you know, your your taxes you paid for the last few years. Understand what is the obligation, that tax obligation that your business has and make sure that you understand that number as another part of your responsibilities. So those pieces, again, were: how much is it costing you to run your practice in terms of operating expenses? How much employees are costing you and how much are they bringing in? How much are you getting paid for your leadership work? And how much needs to be set aside for taxes? All of these pieces come together to create your financial picture and determine how much money is in those bank accounts and whether things feel spacious or whether things feel tight. Then once you understand where you are and some of those financial obligations that you have and the way that things are currently set up, because you can’t just snap your fingers and change your practice overnight, right?
We need to understand where you are. Once you’re grounded in that, then you can start to move into understanding what’s possible and how you want things to be. Start to set a vision for where you want your group practice to go financially. Part of that is thinking about how much of your time is going into running the group practice and what your time is worth. What do you want to actually be paid for that leadership work? What is your salary or wage when it comes to being the leader of your group practice, not just a clinician working within it. But if you’re spending 10 hours a week running the group and then another 15 hours seeing your own clients and taking care of your own clinical work, how much are you going to be paid for that? Ten or probably it’s more like 15 or 20 hours a week that you’re doing of that work. What is that portion of your pay need to be? And that leads into your leadership paycheck, right? What is the paycheck that you need to be seeing coming home between that leadership work that you’re doing – and if you’re still seeing clients, part of that paycheck will also be your client paycheck – what do you need to be paid ultimately to make this worth it for you?
I’ve heard from so many group practice owners that say that they’re actually getting paid less now than they did as a solo practitioner. That can be an okay place to be if you’re like in an investment stage and you’re going somewhere and there’s a vision, but that is not a good place to live. Right. We don’t want you to basically be exploiting yourself for the work that you’re doing, leading other folks by having you get paid way less than you would get paid to see a client yourself or to do some other kind of work. Next, you want to think about how much money needs to be left over at the end of the month to allow you to build buffers. Right. We don’t want money to just go down to zero every month and start over. Part of building a sustainable business – and this applies to all types of business – is having extra money that builds up. Having those buffers so that if you have a down month, if some of your clinicians have to go on leave like maternity leave or sick leave or caregiver leave, there’s still money in the bank accounts to pay everything, right? You’re not going to be in trouble if suddenly sessions drop for a couple of weeks. And with many businesses, the reality is that is where they are. They’re at a place where if they didn’t make sales for a couple of weeks, they would be done. They’d have to close their doors. And we don’t want you to be there. Right. So part of it is starting to set your goals.
When you’re looking at those ideal numbers, what are the buffers you want to see in all those different bank accounts? How much money do you want to see in that payroll bank account so that you don’t have to like white knuckle it every time you run payroll? How much money do you want to see in your operating expenses? And there are guidelines for this, but it’s also personal. Again, we’re talking about your needs and your values. What are the amounts in those accounts that could be serving you really well, giving you that financial stability that most group practices do not have right now? Finally, what are your hopes and your dreams for your practice? Where do you want to go with it? Are there other things that could be requiring money that your practice should be saving for every month? Things like maybe buying a professional suite or being able to offer retreats and having money that you can put down to deposit for, you know, a retreat space to do these retreats that you’ve been dreaming of doing. Those are the things that can really feel exciting and expansive. And I know most entrepreneurs that I know – most group practice owners and many, many solo practitioners, too, you know – we don’t want to get bored. We like to do different stuff. Right. And so what is that Dream Fund look like for you and your group practice? That is money that can be put aside to move towards new and exciting and expansive things beyond what your group practice looks like today.
Once you have point A, which is where you are, and point B, which is where you want to be, all of the things we just talked about in terms of your ideal paycheck, those buffers that money to be scared of in the business, then you can work with your numbers and see what needs to happen to get where you want to go. Using a cash flow projection tool can be a great way to do this, and we have a beautiful one that we’ve built that we use for this in our own business and that we use in next level work, like Money Skills for Group Practice Owners. This is going to be included. You can start to play and be curious about your numbers to see what changes, even gradual or small changes can be made to get you where you want to go. You can play with the number of clinicians that you have on staff and how many clients they see. Would you have more part time clinicians? Would you have full time clinicians? How many sessions at a minimum are you going to require as an employer? And this is also a space where you have the opportunity to be a great employer by setting an expectation for your team that’s reasonable and sustainable for them as practitioners, rather than trying to squeeze as much money out of them as you can. And this is something that I see in group practices that are not in alignment and that don’t have financial health, is they can exploit their employees. And I don’t think that’s who you want to be. I don’t think you want to be a group practice owner that’s trying to squeeze as much money out of your clinicians as you can before they burn out and leave.
You have an opportunity when you really have control over your numbers, to set sustainable expectations that make people want to stay with you. So seize that opportunity. You’re also going to want to be curious about the fees that your clinicians are charging. Are they insurance based? Is there maybe an insurance company that you realize you prefer working with and that pays better and you can get off the other panels? Or do you look at switching your clinicians to be out-of-pocket and then get really curious about what their fees could be and what that could do for overall numbers, how that can get you to those ideal numbers you want to see.
Policies are another piece you can be curious about if you actually started having your clinicians enforce the policies that you already have in place. And often that’s the first step. What would that do to your numbers? Or do you start charging cancellation fees because you’re not doing that at this time. And with a tool when you have different cancellation fee numbers, you can see like, okay, well, what if we charged half the cancellation fee? What would that do to our numbers? What if we had a 48-hour cancellation policy and we charge the full fee because that’s appropriate for the folks that we work with? What would that do financially? Those are all places that you can play with and that will have impact ultimately on how your machine works.
You can look at your operating expenses. Is there something that you can cut? Are there places you could do things differently? Are there investments now or things that you’re paying for by default that you could cancel for now? Or things that you were planning on buying next month that you could defer till later until your numbers really support them? You can think about other offers, too. And this is something we also have built into our cash flow projection tool. Playing with questions of like, what if your clinician started running a group? What if you had workshops and what is that money coming in the door do to your overall picture? And how close does it get you to your ideal numbers? All of these things together give you the ultimate financial results of your practice on the tool. We have all of the these factors at the top: fees and number of clinicians and how many people they see and your operating expenses. This all goes into the top end, and at the bottom you see the financial results.
How much money ends up being left there at the end of the month? How much money is building up for tax payments? Is that going to meet your tax obligations? How much money is available for your paycheck? Is that getting you to that ideal leadership paycheck that you need to make this work worthwhile? Are there leftover operating expense money so you can see buffers building up? Is it hitting the goals that you want to see in your buffers? Being able to play with your numbers and put them all together and be curious about them lets you really see and understand how your group practice machine works and what is possible. I love doing this work with group practice owners because it lays bare the workings of that machine. Once you can see it all come together, you can find those sustainable numbers and understand exactly what needs to happen to make your practice work.
Would you like my support in making your practice sustainable, paying you and your team well for the work that you do? Our beta cohort of Money Skills for Group Practice Owners starts in June and enrollment is open now. This course is about taking you from feeling like an overworked, stressed, and underpaid group practice owner to being the confident and empowered financial leader of your group practice. Click on the links in the show notes to learn more or to book a discovery call with me so we can chat about whether the course is right for you. I’d love to connect with you about it. Thanks for listening today.