Nikki Nitz, CPA, CMA, Owner of Simmons Northwest and Simmons Midwest –
You have been in business for a few years. You work way more hours than you want, missing out on family and life activities. Yet you are not providing the finances or the lifestyle for your family as you had envisioned when you became a practice owner. This is really stuck in your craw. You are not bringing home the bacon. Why?
#1 – You Focused on Revenue Versus Profit
Most business coaches and consultants will focus on helping you grow your revenue. While this is excellent advice, I’m here to tell you it may not be the best advice.
Growing revenues in your practice is simple. There are only two ways. Either you increase your number of transactions or you increase your average transaction amount. Your door swings open more or your clients spend more each time they come to visit you. That’s it! Only two ways! Simple. It may not be easy but it is simple.
So why aren’t you getting the financial results you want in your practice? Because you haven’t thought about “The Power of Profit”. Yes PROFIT – not revenue! What is left after you have paid all the normal operating expenses of the practice (including fair compensation for you being a producing veterinarian and owner/manager of the practice and fair market rent if you own the real estate).
Profit is what you use to reinvest back into your practice. This investment could be new equipment, a facility remodel, a new facility, or staff education and training.
Profit is what allows you to repay your debts.
Profit is what provides you a return on the investment you made in becoming a practice owner. I know for some of you it will come as a surprise that you deserve a return on this investment. You do! You took the risk of either starting the practice or purchasing the practice and you should be paying yourself a return on this investment. No different than expecting a return if you invest in the stock market. This return is what you can use to increase your personal wealth and/or enhance your lifestyle.
Are you one of the business owners that is frustrated by what your tax return shows you have earned as income, what you owe in tax, and yet you have no money to show for it?
This is because the income (profit) on your tax return is what you use to reinvest, repay, and take a return on your investment. If you’ve used all your profits for these three activities then there is no money left over.
Action Steps: Set a goal for increasing your profit in both dollars and a percentage of revenue for the year. This increase comes from either increasing revenues, decreasing expenses, or a combination of both. Monitor your progress on a monthly basis so you can make adjustments throughout the year. The goal is to reach 20% profitability (Net Income divided by Revenue).
#2 – You Exchanged Time for Control
One of the biggest complaints from practice owners is that your practice consumes your life. This is a crying shame! People become business owners with the idea that other people will be doing the work so they have more freedom of their time. This is how it should be! Why is this not working for you?
Because you are exchanging time for control. If you delegated more of what you spend your working hours on, this would free you up. In order to do this, you need to give up some control.
If you want to be in complete control of your marketing, inventory ordering and stocking, computer functions, bookkeeping, appointment scheduling, staff scheduling, etc., in addition to being a producing veterinarian, then you will find your practice consuming your life.
When you delegate these things to other people this is when your life as a business owner becomes freeing.
Action Steps: For a period of at least 2 weeks, constantly ask yourself throughout your day, “Who else could be doing what I’m doing right now?” Then take this seriously! Start to immediately delegate or eliminate.
#3 – No Direction
How does a GPS work? It knows where it is and it will take you to where you want to go, as long as you know where this is. Your business works the same way. A reason you didn’t get the results you wanted is because you didn’t give yourself a destination. You went through your year wandering aimlessly. Your practice ran on a day-too-day basis but without a goal as to where the year should end.
How did you want your practice to end in 2017? Which results were pleasing to you and was this intentional? Can this be repeated? Which results were you not happy with? What changes can you make to either prevent or correct those results? Did you make concentrated efforts to achieve the results you desired?
You need to set a clear direction for where you want your practice to get to. Plug the destination into the GPS. Then share it with your entire team so they can help you get there. By getting your entire team involved and moving toward a specific objective, this creates better team morale and cooperation.
Action Steps: Know where you want your practice to be at the end of 2018. Set clear goals and action steps to get you there. Delegate the action steps. Share the destination with your team. Have them set their own goals that support achieving the desired 2018 results. Hold people accountable starting with yourself. Have consequences for goals unmet but most importantly celebrate victories.
Now let me ask you this…do these three actions apply to your life as much as your business? At the beginning of 2017 did you have a clear vision of what you wanted to accomplish in your life during the year? Did you spend time being “busy” but not “productive”? Did you focus more on earning income or how much of this income you kept?
Let’s get you the results you want in 2018!
1. Be clear on what you want to achieve. Plug the destination into the GPS (your mind).
2. Set specific goals that upon completion, move you toward your destination.
3. Create action steps to accomplish your goals.
4. Share the destination, goals, and action steps with your team. Even better, once you as the owner set the destination, involve your entire team in setting the specific goals and action steps.
5. Delegate as much as possible.
6. Eliminate time wasters that keep you busy but not productive.
7. Focus on growing profit.