Lessons from Successful Business Owners: Strategies and Habits for Profitable Practices
Host Julie Herres discusses the habits and strategies common among the most successful business owners. She emphasizes not to equate the appearance of wealth with actual success. She suggests that successful business owners often do not overextend their resources but smartly use credit cards and plan investments. Successful business owners rarely take uncalculated risks. They value their time and spend it wisely on the business. They have emergency funds, focus on perfecting one revenue stream before moving on to others, and rely on experts for various business requirements. These strategies have helped drive their businesses forward in a financially sustainable way.
Episode Highlights
LINKS & RESOURCES
Podcast Production and Show Notes by Course Creation Studio
Lessons from Successful Business Owners: Strategies and Habits for Profitable Practices
Host Julie Herres discusses the habits and strategies common among the most successful business owners. She emphasizes not to equate the appearance of wealth with actual success. She suggests that successful business owners often do not overextend their resources but smartly use credit cards and plan investments. Successful business owners rarely take uncalculated risks. They value their time and spend it wisely on the business. They have emergency funds, focus on perfecting one revenue stream before moving on to others, and rely on experts for various business requirements. These strategies have helped drive their businesses forward in a financially sustainable way.
Episode Highlights
LINKS & RESOURCES
Podcast Production and Show Notes by Course Creation Studio
Episode 131: Sharing lessons learned as an accountant from highly successful business owners
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[00:00:00] Julie Herres: You're listening to Therapy for Your Money, a podcast about all things, money and finance for therapy practice owners. If you want to feel confident and in control of your financial life, then you've come to the right spot. I'm your host, Julie Herres. I'm an accountant and the owner of Green Oak Accounting.
[00:00:20] Julie Herres: My firm specializes in working with private practices across the US and my team and I have worked with hundreds of private practice owners. I'm on a mission to share all the best practices I've learned along the way. Because I want you to have a profitable private practice.
[00:00:35] Julie Herres: My new book, profit First for Therapists is available at most online retailers. You can get it in paperback, audiobook, or ebook as well. Go check it out.
[00:00:45] Julie Herres: Hi there. And welcome to the therapy for your money podcast. I'm your host, Julie Harris. Today I am talking about lessons I've learned as an accountant from highly successful business owners. Over the course of my career, I've had the chance to work with, uh, practices of really all shapes and sizes. But today what I'm focusing on is those really, really successful business owners.
[00:01:09] Julie Herres: Uh, not just the ones that look successful from the outside, but that truly are successful. all the way around. I'm going to share some of the lessons learned, the strategies, uh, and just the habits that these business owners have. First of all, just because someone looks wealthy, doesn't necessarily mean that they are.
[00:01:29] Julie Herres: There are lots of people who want to appear like they have money. They have fancy cars, nice clothes, but behind the scenes, they are bouncing payments. I first saw this happen Uh, many years ago when Tesla's were brand, brand new and were considered very fancy, they're pretty commonplace now. Uh, but I had a client who at that time was a restaurant owner and they were driving this really nice Tesla and the payment was.
[00:01:55] Julie Herres: I think just under just over 1, 000 a month. Uh, and so they were spending a good amount of money on that, on that car. That's what I would consider a pretty high car payment. And then behind the scenes, they were paying their dishwashers sometimes two to 300 a week, right? So a really, really low wage. And they were bouncing some of those payments.
[00:02:16] Julie Herres: These poor sweet dishwashers, uh, weren't even getting their payments because of that big high Tesla payment. So this business owner specifically looked really fancy, but they actually were not. I found that most of the time, wealthy people don't typically want to bring attention to themselves or their success.
[00:02:34] Julie Herres: So most of them will tend to drive. a modest car, not, not necessarily a cheap car, right? It might be a luxury car, but it's not necessarily flashy and it's not always new. Most really successful business owners are also not overleveraged. They're not out there buying things they can't afford or financing things that are not mission critical like printers or phone systems or things that just aren't going to move the needle that much.
[00:03:03] Julie Herres: They know that credit cards are useful, but they are not the path to wealth. So most, uh, successful business owners are using credit cards and they are paying them off each month. They're also taking advantage of the points that a credit card offers. So they, they are using that for. Personal travel for gift cards for other things that can be useful, but they're not relying on that as a way to get rich quick.
[00:03:27] Julie Herres: Successful business owners plan and save up for big ticket items that they want to buy or invest in. So they've already learned to delay gratification. For example, if a business owner is thinking about adding a software, that's going to be pretty pricey, but that will move the needle for their business.
[00:03:46] Julie Herres: They're thinking about it. They're running the numbers. They're not just. Pulling the trigger right away and moving into something that they may or not actually, uh, be able to afford. So whether that's a big investment, like adding a location or something even bigger, like buying a building for the business, they're only making those moves.
[00:04:07] Julie Herres: Uh, when and if they have cash for it and cash reserves so that it's not going to negatively affect the business. I've seen over the years, many times a business owner tried to make a big move like that, adding a location, something along those lines. without cash. And they often have ended up in a really, really tough situation where they're then looking at what kind of line of credit can I get really quickly?
[00:04:33] Julie Herres: Those tend to be really expensive. They're at the last second taking payday loans, uh, to just to be able to run payroll because they've put their business in a tough cash position. By, by skipping that planning step where they know exactly how much it's going to cost. Uh, even though there, there may always be a surprise, but they know how they're going to pay for something.
[00:04:54] Julie Herres: So in those cases, waiting one or two years to be in a good financial situation, it really can make a huge amount of difference. So wealthy business owners, they're patient when they need to be. Most entrepreneurs are overachievers and they like to go, go, go, go, go. Uh, I feel, I feel personally seen in that, right?
[00:05:14] Julie Herres: I just, I like to move fast and keep going, but really successful business owners. They know that they can lay a foundation to grow and hold on until they have the money that they need. They're also evaluating the return on investment of something before they buy it. Uh, so there has to be a way for something to make their money back.
[00:05:37] Julie Herres: If you're investing in ads, ultimately, if you're spending 500 or 5, 000 on ads, in theory that should be able to make you an, uh, an exponential return on your investment. So if you're spending that 500, you should be able to bring in. Hopefully 000, multiple thousands of dollars, right? So that, that, that is a really positive return on investment.
[00:06:00] Julie Herres: But if we're just buying something to buy something that may or may not actually be worth it. So, uh, successful business owners are looking at things like that before they buy something. Uh, they are also taking risks. but only calculated risks. So it's not that they're never taking on debt or never taking a leap of faith, but they're doing that in a calculated way.
[00:06:23] Julie Herres: Again, it's in a way that is going to make them money. So they're not just jumping in with a hope and a prayer. Thinking that this new venture or new thing that they're doing is going to make them money. When they are taking that risk, they know that there is a high likelihood that this is going to be successful and there is always a chance that it's not going to be successful, but they know that there is a really, really good chance that this risk is going to pay off.
[00:06:48] Julie Herres: Uh, so when it comes to, uh, leveraging debt, if you are taking on a loan to then go build It's A new space or build it out that is debt. That is likely going to be successful. That new space should be generating significant income for you within a couple of months. So that typically is a better use of taking on debt to add benefits for your team, which is not going to add any kind of return on investment, right?
[00:07:15] Julie Herres: That's something that can be valid to do. I don't want you to think that I, um, Don't encourage you to give benefits to your team and that successful business owners aren't taking care of their teams because they absolutely are taking care of their teams, but they are doing so in a way that is sustainable to the business.
[00:07:32] Julie Herres: Um, so if they had to take on debt to. Make payroll or add benefits. That is a signal that something is not going well here, that this is not a financially sustainable situation. And so they would want to get things back on track before doing something like that. Successful business owners, they really value their time.
[00:07:53] Julie Herres: They're intentional about how they spend their time. They tend to not allow themselves to be pulled back into the weeds. Other than a really exception, typically really urgent situation, but they also are going to value their time off and their rest time. So they are working hard. Absolutely. Successful business owners are working hard, but they also know that they can't work hard all the time.
[00:08:15] Julie Herres: There has to be vacation times. There has to be time off. There has to be downtime for that to be possible. And that they also need to be intentional about spending time working on the business versus in the business. So again, when I think
of
[00:08:30] Julie Herres: a highly successful, uh, business owner, they're usually making multiple millions of dollars per year, right?
[00:08:37] Julie Herres: That's, that tends to be what we're looking at. Um, I think someone can be really, really successful in solo private practice. Absolutely. But they're very much, uh, the operator of the business, but they're also working very much in the business. They are the only one. Uh, doing the work in the business clinically at least.
[00:08:54] Julie Herres: So I'm thinking of those multi million dollar business owners, they are spending very intentional time working on the business. They really value those hours. They protect them at all costs because they know that that is what's going to continue to drive the business forward. The working in the business can also be valuable, but not in the same way and it does not have the same return on investment as the work.
[00:09:17] Julie Herres: On the business. Uh, another thing that I've noticed often with successful business owners, they have an emergency fund, both personally and definitely in the business. They are not running, uh, right against the 0 bank account. After they run payroll, there's money left in the business. After the credit card bill gets paid, there's still money in the business.
[00:09:43] Julie Herres: They are. Intentionally pulling money out of the business to pay themselves. But that is calculated. They're not just taking, uh, money willy nilly without knowing if they actually can afford it. There is a reserve. They know that if something catastrophic were to happen in the business, that they would be okay, not forever, but for a while, they would be able to keep their team members employed, keep the lights on in the business and that the business would continue to, um, continue to survive.
[00:10:12] Julie Herres: And because They want the business to continue to survive. These really successful business owners also typically will have a personal emergency fund on the back end of that so that they know they've got a long runway before they run out of cash. Again, it's not forever. No one has a forever, uh, runway unless you maybe have a trust fund or very lucky in that way, but like most people just don't have that.
[00:10:35] Julie Herres: But you know that you could survive personally for a while so that if something again, catastrophic were to happen in the business, you could maybe reduce expenses by not paying yourself for a little while because you've got that personal emergency fund to help you as well. And the more risk in the household, the more money is in that emergency fund.
[00:10:52] Julie Herres: So typically we're, we're going to see that be. larger for households that have two business owner spouses. For example, there's just more risk in that household than one person working for a cushy government job. And then a business owner. I mean, there's a good chance that that cushy government job is going to continue for a really long time, right?
[00:11:11] Julie Herres: So just risk management is always part of that conversation. Always successful business owners are. Really focused. They get really good at one thing before adding more things. And I'm using air quotes. I know you can't see them, but they get really good at the one thing before adding more things. They crack the code on a revenue stream before they move on to something else so that they can support the building period of that new revenue stream.
[00:11:39] Julie Herres: Let's look at an example. Most practice owners are going to start with a revenue stream of therapy. That's typically what you're going to do in a therapy practice. So typically you're going to need to get that dialed in. Before you move on to something else. So the something else is not what's going to save the therapy side, right?
[00:11:54] Julie Herres: We want to get the therapy dialed in. So that means there are systems around attracting new clients, attracting new clinicians, billing, managing the team, all of that fun stuff. They know that every session is contributing to the profit of the business. And when that's not the case, they're fixing that before adding more work.
[00:12:12] Julie Herres: So if you know that you have a system that is completely dialed in, that is working, that is successful, then you can. Pass that along to someone else, right? Someone else can be managing the day to day of that while the business owner goes and works on new projects that will also be revenue generating and that will diversify their income, right?
[00:12:29] Julie Herres: So they may be building courses, going after grants or doing something else, but those things should be, uh, in addition to the most important. Part of the business already being successful not instead of right. So I if the business is not working Well, if the therapy side is losing money I don't want you to go build courses to try to offset the fact that the therapy side is losing money That's not going to be successful I want you to fix that first before you go on and add more stuff because that that focus is really really Powerful if you are able to just focus on that one Most important thing you can give it your all instead of being kind of scattered and going here and there and trying to focus on everything when you focus on everything truly you focus on nothing my last lesson learned from successful business owners is that they rely on experts.
[00:13:21] Julie Herres: They do not have it all figured out. They rely heavily on a team of experts around them. So these are experts and their respective fields, uh, an accountant, an attorney, sometimes often more than one kind of attorney. There may be a business attorney and a labor attorney. There's a billing expert. There's an HR expert.
[00:13:40] Julie Herres: Uh, these business owners will often have a business coach themselves. They have a relationship with their banker. They work with an ad specialist. They're look, if they're looking for a new space in the business, they have, A real estate agent and a broker. My point is that they are not trying to figure it all out on their own.
[00:13:56] Julie Herres: They know just enough about each specialty that they can understand what's going on in the business, right? If you're working with an accountant, I want you to understand the movement of money, have a general understanding of how things get taxed, right? I absolutely do want that, but the successful business owners know that if something isn't going well, the heavy lifting is going to be done by the expert.
[00:14:17] Julie Herres: If you're having a labor issue or a dispute with a team member, You're almost immediately reaching out to that labor attorney to say like, I know I'm going to need support here. Something is going on. Let's work on it together. You've probably heard me say before on this podcast that I don't think there is a perfect size of business.
[00:14:35] Julie Herres: I think you can be really, really successful and happy as a solo practice owner. And you could also be really, really successful and happy as a, uh, large practice owner, right? Making multi multiple million dollars. per year. Uh, but this episode was really about like those large, large practice, because I think a lot of people have the goal of eventually growing into that.
[00:14:56] Julie Herres: And so I thought this would be helpful to kind of see what are people who are ahead of you doing, uh, behind the scenes? I honestly think that my team and I at Green Oak Accounting do some of our very, very best work with people who are in that growth mode. Uh, we have so many clients that I can think of that went from 40, 000 a month to 400, 000 a month over the last many years working with us.
[00:15:22] Julie Herres: It's definitely not because. Uh, of us, right? Like we didn't do that. The business owner was in there in the trenches doing the hard work, but they were supported by a team that knew what was going on. It could help them make the best financial decisions to continue to grow their practice in a financially sustainable way.
[00:15:40] Julie Herres: Uh, so I think that's one of the. The transitions that my team and I get most excited about, uh, just because there's so much opportunity to, uh, influence what is going on and to set up a business owner for success in the future. Um, so I hope you found something that was helpful for you in this episode.
[00:16:01] Julie Herres: If ever you're interested in checking out the services that we offer over at GreenOak Accounting, you can go to greenoakaccounting. com slash consultation. See you next time.
The information contained in this podcast represents the host and guest general opinions and should not be construed as personalized accounting and tax advice. Listeners should consider all facts and circumstances before applying this information and seek appropriate advice from an accountant, financial planner, lawyer, or other professional.
Any info provided does not constitute accounting, tax, or legal advice.