When it comes to growing your private practice, there may be a lot of obstacles you'll face! Making decisions when it comes to finances isn't always easy, so we break down some of the hurdles you might have to leap over when it's time to expand.
Kelly is apart of the accounting team at GreenOak Accounting. She is a team leader and strives to provide the best service to all of our clients. Kelly specializes in Profit First implementation and ongoing support, and enjoys teaching our team members her methods so they can also assist their clients with implementing Profit First!
Episode Highlights:
- Opening a new location doesn't fix cash flow issues
- The estimated cost/time of opening a new office is often greater than anticipated
- You have to consider upfront costs (like building out new spaces, furniture, deposits, legal fees, etc.), as well as ongoing expenses (such as rent, utilities, administrative hiring, etc.)
- While it will increase your profit down the road, it's best to make sure you have a decent safety net of cash in the beginning. Expanding prematurely can cause additional stress!
- When does it make sense to grow?
- Once you've reached about 70-80% space capacity (not schedule capacity), you should start to consider expanding
- Typically, when you are in that 70-80% range, you should be bringing in enough profit to set money aside for expansion
- Keep an eye on your KPIs
- We recommend taking a look at your overall capacity, how many days a week your practice is open, and how many sessions you take each day per clinician to get started
- How can Profit First help?
- The Profit First methodology includes utilizing 5 separate bank accounts, including Income, Profit, Owner's Pay, Tax, and Operating Expenses.
- You can set up additional accounts to assist with specific goals, such as a "Future Office Savings" account. You can set a specific percentage of money aside into this account to go directly towards your expansion.
Links & Resources:
GreenOak Accounting
GreenOak Accounting Consultations
Profit First by Mike Michalowicz
Therapy For Your Money Podcast