Navigating the financial maze of therapy practice ownership can feel like a daunting quest. That's why we're equipping you with a map and compass in the form of the Profit First system, designed to cut through the fog of cash flow confusion.
On this episode, I take you through the process of seizing control of your finances, projecting income, and preparing for expenses, all to ensure the foundation of your practice is as stable as your commitment to your clients.
We often hear tales of entrepreneurial sacrifice, but what about the chapter where the hero—yes, that's you—gets their due rewards? I pull back the curtain on the emotional roller coaster of starting and running your own business, sharing stories that resonate with the journey towards recognizing one's own worth. It's a heartfelt reminder that taking care of your financial health isn't just good business sense; it’s a non-negotiable aspect of respecting the time, energy, and passion you pour into your practice.
Finally, I extend a lifeline to those struggling to find equilibrium between work demands and life's pleasures, offering practical strategies for creating a business that enriches your life rather than consumes it. Learn how to set fair prices, delegate wisely, and establish a consistent paycheck that reaffirms the value you bring to your business. It's not just about serving your clients; it's about serving yourself, too. So join me, and let's reshape your business to be the supporting structure for the life you aspire to lead.
Navigating the financial maze of therapy practice ownership can feel like a daunting quest. That's why we're equipping you with a map and compass in the form of the Profit First system, designed to cut through the fog of cash flow confusion.
On this episode, I take you through the process of seizing control of your finances, projecting income, and preparing for expenses, all to ensure the foundation of your practice is as stable as your commitment to your clients.
We often hear tales of entrepreneurial sacrifice, but what about the chapter where the hero—yes, that's you—gets their due rewards? I pull back the curtain on the emotional roller coaster of starting and running your own business, sharing stories that resonate with the journey towards recognizing one's own worth. It's a heartfelt reminder that taking care of your financial health isn't just good business sense; it’s a non-negotiable aspect of respecting the time, energy, and passion you pour into your practice.
Finally, I extend a lifeline to those struggling to find equilibrium between work demands and life's pleasures, offering practical strategies for creating a business that enriches your life rather than consumes it. Learn how to set fair prices, delegate wisely, and establish a consistent paycheck that reaffirms the value you bring to your business. It's not just about serving your clients; it's about serving yourself, too. So join me, and let's reshape your business to be the supporting structure for the life you aspire to lead.
There's some commonalities when it comes to being a practice owner that every practice owner struggles with.
Speaker 1:
Almost every one we've come across who we've talked to or worked with, has struggled with some of these same issues. Today, I'm going to highlight three things that most practice owners are struggling with, and I'm also going to provide you with some solutions for each one. My name is Craig and I'm the CEO of Desi Financial Coaching. Our goal is simple to help you run a therapy practice that is permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money and serves more people. This is the Therapy Business Podcast. Have you ever been on the struggle bus when it comes to your money? Have you ever felt overwhelmed or frustrated or there was no clarity of what was happening and what was going on Really? At some point? Every practice owner, every business owner, has done this, and even the ones who look like they're doing amazing on Instagram or seem like they have it all together under the surface. A lot of the times, they're struggling just like you might be. We've seen practices of all sizes who struggle with some of the same things, especially around money. Now, there's a million reasons for this, but a lot of times it's just not having a game plan. When we go into this business, we start as a therapist, then we have to start learning how to market, we have to start learning how to hire, we have to start learning how to grow and expand, and the money, instead of being a vehicle to push it forward, just becomes this afterthought of reaction, and so it's not unusual to struggle with it. It's not unusual to stress and feel frustrated or feel some anxiety around your finances when it comes to your business. Now, there's a million things that it could boil down to, but, truthfully, there's three key areas that we have identified with our business owners, with our practice owners, that we've been able to help them fix and look at and implement a tweak or a change, and so I want to highlight that with you. The first one that we have seen is that practice owners have no idea where their money is going. Now, this is back to that reaction cycle thing. You have money come in and you look at your bank account and you say, okay, I've got money to go spend on this. I have money to pay myself a paycheck. I have money to pay down this credit card or not pay down this credit card. And then the inverse of that is you look at your bank account going, ooh, I don't have enough money to do X, y or Z, and panic sets in. All of that has a reactive effect. You see how we're looking at our numbers. Then we're deciding what we can do, what we can do, what we should do, what we're able to do. We're freaking out because money gets deposited, but then it's time to run payroll or a subscription, auto charges, especially those annual ones that maybe sneak up on you, and maybe what you thought was okay you were doing fine. Then, all of a sudden, the next week you are back into dire straits of feeling like a failure when it comes to managing finances. Then a little bit more money gets deposited, you go and pay yourself and then it's back to being zero.
Speaker 1:
This is such a common area. This is something that I've struggled with. It's something that every practice owner at some point has struggled with or is still struggling with to an extent, and truthfully, I don't know that you can out-earn this. Whether you make $50,000 per year, whether you make $5 million per year, this is an area that it's easy to struggle. You have to have a game plan. So that's the solution is, you have to have a system that provides clarity and control over all the cash in your business what's coming in and where does it need to be going before it ever hits your bank account.
Speaker 1:
Doing your best to project how much are you going to be earning? Looking at your clinician's caseloads, how many clients are they seeing per week? What are they earning per week? What can we expect to be coming in in the coming weeks? How many bookings do we have scheduled? Now, I know there's cancellations and there's things that may come into play that might affect those numbers, but we want to, as best as we can, look in advance to say how much business do we have coming in in the coming weeks? How are we doing? And then, what expenses do we have coming? When is payroll going to run? How much are we going to need to pay our clinicians when we do run that payroll? Is there enough money for me? Now?
Speaker 1:
In episode two, which I'll link in the show notes, we dug into a money system called Profit First. This is the system that we help all of our practice owners implement. It is a game changer when it comes to managing your finances. It's the system I wish they would teach us when we're in college, when we are starting a business, before they even give you a business license, to say take this course, learn how to do this, because it's going to completely change how you view money. It's going to help your business stay open longer.
Speaker 1:
Profit First is all about opening bank accounts. So I'll give you the quick 30 second view of it, but I really encourage you to go back to episode two and listen to that episode to get a real good deep dive into it. It's bank accounts. It's having separate bank accounts for each core bucket of your business. So having a bank account that we nickname income, where all deposits come. So when you make money through simple practice and it gets transferred to your bank account, it goes into that little income account. Then we have a profit account. So we move a little bit a certain percentage out of the income account into that profit account. We move some into an account nicknamed owner's pay, some into one that's nicknamed taxes and then one that's nicknamed operating expenses. Those are the core accounts that we usually see practices use. Sometimes we'll have one for clinicians or payroll, but really those five accounts that I mentioned originally are the core ones that we want to make sure that we have. This makes sure that we're being proactive.
Speaker 1:
Now we can go into it with this game plan of okay, if I'm going to make dollars, that's what I'm expecting, I'm expecting my expenses to be so. Let's just say, you're expecting to make ten thousand dollars, maybe this week or this month, and then you go and you look at your expenses and you're saying, okay, my expenses are going to be five thousand. So then we know, right there, half fifty percent of whatever comes in, we need to move over to that operating expense account so that you can cover those expenses. Then you know you're going to pay yourself maybe $3,000. So there's, $3,000 is 30%. So you can see how we can proactively go about it.
Speaker 1:
Now this can be a careful, cautious procedure. So when it comes to figuring out what percentages should be, a lot of times we like to go back and look at your data. What have you been earning? What have you been paying yourself? What have your expenses been in the past? That typically doesn't lie. Now, if you're paying your clinicians a percentage, then we know that's going to increase as business increases. But we want to look and see what has it traditionally been, and then we can come up with those percentages. This is what we do.
Speaker 1:
So if you want some help figuring out how much you should be spending in operating expenses, how much you should be spending in profit, how much you should be paying yourself, be sure to click the link in the description or in the show notes and get connected with one of our coaches, because even on a free call it's a free 30-minute call we can at least get you some guidance and some clarity on how to get started with this. Whether you choose to work with us, ongoing or not, we at least want you to get some footing and getting headed in the right direction. So the key here of not knowing where your money is going is to have a system in place, and if you don't have a system currently, don't beat yourself up. Like I said, almost every practice owner is dealing with this. So the key is just let's make that change, let's make it a priority, let's get a system in place. Problem number two is most practice owners are not paying themselves what they're worth.
Speaker 1:
Why do we start our own practice? Why do we go into a business, start our own business just to not pay ourselves a reasonable salary, what we deserve to earn. Most of us started in a nine to five of some kind, whether you were a therapist for another practice or whether you had a career before this that you got burned out and you decided you wanted to go and get licensed and start doing therapy, whatever it is. We all started somewhere. Most likely Very few, and maybe you're one of the the exceptions. Very few people go to straight to college and immediately jump into their own practice. It's usually there's those stepping stones, especially because you need your supervisions and all those things.
Speaker 1:
So why do we decide to stop working for someone else, to leave that nine to five, to start a business? Why do we risk so much Risk everything? Starting a business is an incredibly high risk. Starting your own practice that was a risky move. It took guts, it took courage. Why do we do that? And then just to turn around and not pay ourselves nearly what we're worth? Why are we paying ourselves less than some of our clinicians? And hopefully, if you're laughing to yourself, that means that resonates, because it's very common is to pay some of your clinicians more than you're even paying yourself. You and I want you to hear this you are your most valuable employee. You're the most valuable employee in your business. You're the only one who took risk and put everything on the line for this business. You're the only one, most likely, who's staying up late stressing about the finances, stressing about growth, stressing about getting clients. This is your business. So why do we put ourselves as an afterthought? Why are we still paying ourselves as if we are a clinician? So why are you maybe paying yourself an hourly rate or a percentage rate of who you're seeing? We need to pay ourselves as the business owner. You are running this business and we want you to be paid like the business owner.
Speaker 1:
Now, I know there's a hang up here and there's a reason why a lot of practice owners struggle with this and why a lot of practice owners don't prioritize themselves. And that's just because it can sometimes feel selfish. It can feel self-serving, it can feel like we are being greedy, that we go into this because we want to serve people. We want to help people. Likely that's why you do what you do. You want to help people. And when you start to prioritize yourself and money, that can feel a little icky and we could probably spend a hundred episodes digging into why that is and the root of that. But what I want you to know is you deserve to be paid well. You deserve to be compensated well. You are the business owner you should be, so we want to serve people. Now I want to be a little honest, too, in this and just say yeah, maybe you started your business to serve and help people, but if we get down to the root of it, is that really the true reason why we started it? Because you can serve people. Working for someone else, you could provide quality therapy and help people with their mental health in another capacity, working for another business.
Speaker 1:
The reason we get into our own business is typically for two reasons we want more time or we want more money. We get into business for selfish reasons, and that's okay. I want you to know that. That is okay. If you just want more time, you want to be able to spend more time with your family. Maybe you just want the opportunity to work in your sweats, whatever it is, that's okay. But what happens is you're working 70, 80 hours a week and you're not getting paid what you want.
Speaker 1:
I was a fourth grade teacher for many, many years, and when I hit that point, that breaking point, where I was burned out and I needed to make a change. I really was looking for something where I could make some more money and I could be more free. I felt like I was trapped at the school from start to finish of the day. I couldn't leave. I felt like I could get online, literally as a public educator. I could go to the of the day. I couldn't leave. I felt like I could get online literally as a public educator. I could go to the district's website, I could look and see how much I would make over the next 25 years and if you know anything about how educators are paid, it was very, very depressing.
Speaker 1:
But me, at my core, I'm goal-driven, I'm goal-oriented, I'm money-driven. I can confidently say I'm money driven. I'm not, I wouldn't. I can confidently say I'm not greedy, I'm not money focused. I don't prioritize money, but I do enjoy earning money. I enjoy making money. I enjoy using money as a metric for how many people we help in our business. So when I was working for someone else, I didn't have any control over that. I was at the whim of how much are they going to pay me? And no matter how much more I worked or how much more I leaned into it. It didn't make a difference. So that was a huge reason for me. I wanted control over my income and control over my time. And, of course, much like you, probably I started I wasn't prioritizing that either. So how do we solve this? Probably I started I wasn't prioritizing that either. So how do we solve this? How do we pay yourself more? Well, I mean, that's clearly the solution is we got to pay yourself more money, more consistently.
Speaker 1:
I want you to think of it this way Pretend you're the CEO. You go to interview at a company and you're interviewing to be the CEO of this company and they hire you and you say, great, great, okay, so I'm going to oversee everything that business does. And you say, great, great, okay, so I'm going to oversee everything the business does. Now, what's my salary going to be? And they go well, there's not really a salary. We're just going to pay you. You know, whatever we just, whenever you need money, just let us know and we'll cut you a check for that amount. So if you need to pay your mortgage, let us know how much it is, we'll pay those bills. And if you need to pay this bill or this bill. Just let us know and we'll take care of it. Now, this wouldn't fly right. That sounds ridiculous. You wouldn't let this happen.
Speaker 1:
Yet this is what so many of us business owners do is we don't pay ourselves a paycheck. We don't pay ourselves consistently. It's just uh-oh, I need money, my personal account's getting low, let me that money out. And the vice versa is true. If you were to hire someone to run your business, if you went and hired a CEO for your business, you wouldn't want them dipping their hand into your business account every time they need money. So this is such an important distinction. I want you to treat yourself with the same level of respect that you would demand from someone else. Your business needs to treat you with the same level of respect that you would demand from another business, and what that looks like is setting up consistent paychecks, whether business is good, whether business is bad, paying yourself the same amount every week, every two weeks, every month. You get to decide how frequently, but you get a paycheck.
Speaker 1:
Now we recommend doing reverse engineering this and doing an exercise called income targeting, which we can break down in a future episode, or, if you're curious about that please schedule a call with us. We're happy to take you through that exercise. But the nutshell of it is starting with how much you need to make to cover your personal expenses. So getting in touch with your personal budget and then reverse engineering that and just saying, ok, if I'm going to pay myself this much, how much does my business need to make in order to afford that? And am I at that place yet? And if I am, or what percentage does that need to be and can we do that? So starting there, starting with what you need and then building the business around it that is such a key distinction is starting with you. This business is for you. You started it for you, so let's do that. This business is for you, you started it for you, so let's do that and please own it and embrace it. You are not greedy. You are not selfish. You are still making an incredible impact on your community and on the people around you. So don't gloss over that or think that this takes away from that. Focusing on you makes sure that you can grow a business that can help more people. Paying yourself what you need ensures that you don't need to close the business down. Focusing on growing your revenue ensures that you have enough to pay people to serve more people in your community. So all right.
Speaker 1:
Problem number three that we usually see is that your business begins to feel like a J-O-B, your business starts to feel like a job A J-O-B, your business starts to feel like a job. So this is such a trap that we can find ourselves in and it's this idea of we never stop working. It's seeing clients, especially in the early days. We almost justified by saying I just need to get this thing going. So you know, it's just me. I have to provide these or see patients, x number of patients per week to make ends meet. But then I also have to do billing documents so that I can send those off to insurance. And then I also have to work on the website and have to do these consultation calls to get more clients in the door, and I have to do some marketing and outreach and networking and I have to do the bills and run the books. And it's so much stuff that suddenly we leave a nine to five, a 40 hour a week job and we're now working 70, 80 hours per week and we're burned out. The lies.
Speaker 1:
The lines can be blurred between home life and work life. I remember my wife having to talk to me about the fact that I was still at work even when I was at the dinner table. I was there, but I was not there. I struggled with when I started my business. Even though I was done with calls for the day and even though I was done with sitting at my computer, my brain would not stop thinking about the business, about my clients, about a problem or about growth or whatever it was. I struggled with that line, whereas when I was teaching it was very easy for me to be all in, bought in during the workday and then when I got home I was back into husband, dad mode and it was easy for me to make that cut, and over time I've gotten better at that as a business owner. There's times, there's seasons where it's still a struggle and I still catch myself off in outer space and again, my body's there but my mind is not.
Speaker 1:
But we need to really prioritize that work-life balance, which is that solution. It's how can we make sure your business supports your work-life balance? Starting with you, we want to make sure that you're pricing accordingly, so that you don't have to see a ton of patients. We want to make sure that you have systems in place to make sure that you have the right team or people under you to delegate tasks to, so that you're not spending all your time working in the business. Then you can focus more on working on the business, growing it and really reducing the hours that you are required to be there.
Speaker 1:
I want you to think just through what does your ideal work week look like? What tasks would you do? How many hours would you put in in a given ideal work week? Something that gets lost is we get to choose what our business looks like. You get to choose. That's the beautiful thing about it. You get to craft this whole thing. You get to decide how big you want it to get. You get to decide what role you play in it. If there are things that you are not naturally gifted at, that you don't enjoy doing, you get to decide how can I get this business to a place where I can hire someone to handle that, where I could outsource the books, where I could bring in an admin to do X, y and Z to manage the bookings. Where I could bring in clinicians to do the actual sessions with patients and clients. You get to decide what your role is.
Speaker 1:
I've met practice owners who their ideal week is sitting with patients, is working with patients, and so what do they do? They go out and they hire a manager or a CEO to run the business side, to focus on those growth pieces, so that they don't have to. Of course, they're always gonna have their hand in it it's their business but they don't have to be in it day to day. They get to decide what they wanna do with their time. Your business should support your ideal lifestyle. I said it earlier with the money. Same thing is true with your time. What does your ideal lifestyle look like on the personal side? And then, how much money do you need to fund it? And let's build the business around that. If it includes travel, if it includes doing kids sports with the family, if it includes getting a massage once a week, I don't know what it is. If those are your ideal lifestyle things, we want to make sure that the business affords it and the business gives you the time to do it.
Speaker 1:
One of my non-negotiables is I drop off my kids and pick them, I walk them to school every day and I walk them home from school every day. My kids at this right now are in first and second grade, I know and it's 30 minutes in the morning and it's 30 minutes in the afternoon that I just erase from my calendar. No one can book me during that time, but it is such a valuable time for me. I block days in the week and in the month to go eat lunch with them at school or to do lunch with my wife or different things. So it's so important to be purposeful with it.
Speaker 1:
The key here and this is across the board, from the money to the lifestyle, to the time we have to be proactive, not reactive. If we are reactive and that's just our natural tendency, that's our our default is to react. How much time do I have? Or just start the day and then at the end of the day, you're looking down and, okay, what did I do? What did I accomplish? How much money do I have? What am I going to do with this money? Like I was talking about looking at the bank account and then reacting to it. We want to be proactive with your time, with your finances, with what you're paying yourself, and then move forward from there. So what's an action step that you can take today to fix this.
Speaker 1:
What I want you to do is number one look at, go listen to episode two if you haven't already, so that you can get familiar with that money system. That's an easy action step. It's a 20-minute episode. Go listen to it and get familiar with the Profit First system, opening those accounts.
Speaker 1:
Number two is I want you to just start paying yourself something consistently. It can be small. If you're worried about draining the bank account, just pay yourself something small. If you've been just dipping your hand in the business all along, that's okay. If you still need to do that a little bit, that's okay.
Speaker 1:
We always say it's not healthy to lose 30 pounds overnight, so it's okay if you take baby steps into making changes in your business and how you handle money. So maybe just start by paying yourself $500 a month, just consistently. Every month you have $500 deposited into your personal account and then if you still need to dip in, well, I would assume you still need to dip in $500 is not nearly enough. But then if you want to keep doing what you've been doing, which is just paying yourself as you've been going, that's fine. But I want you to practice getting to that habit of paying yourself consistently and then over time you can just increase it to $1,000 a month, $2,000, and so on, just every month, every quarter, just slowly moving that needle up until one day you find that you're able to pay yourself enough that you don't even need to dip your hand into the business anymore.
Speaker 1:
So those are some action steps I want you to take. I want you to be proactive, not reactive. You have got this. Don't forget about yourself in this whole journey. It's so easy to forget about ourselves. I want you to have a business that gives you more time, more money and helps you serve more people. That's what this podcast is all about and this is where it begins. Thanks for joining us on the therapy business podcast. Be sure to subscribe, leave a review and share it with a practice owner that you may know. If your practice needs help getting organized with its finances or just growing your practice, head to therapybusinesspodcom to learn how we can help.