Did the title of this article make you fidget?
Did you become just a bit uncomfortable with either concept?
Have you experienced occasions of paying your staff but unable to pay yourself?
Unfortunate as it is, it’s an owner’s responsibility to improve the overall financials of the business so all are paid well and on time, and additional funds are available to cover the monthly business costs while also maintaining reserves for emergencies and growth.
Granted… These are two highly sensitive subjects and usually a source of major concern and stress for the typical business owner. To be honest, we find most business owners have not attended business school in addition to their technical / professional training, but given quality assistance and informative training in specific aspects of their business they learn how to thrive as a business owner.
Here are a few key things one must understand about Finances and Profitability;
1) Money has an exchange value; one valuable exchanged for another. Your services or products must have value to exchange them for your customer’s time and money. You then must work to increase the general public’s awareness on the value of your services.
2) Ensure you have good-intentioned and well-trained staff to deliver your services with quality in mind. People WILL pay for things of value! Delivering services halfheartedly will not maintain that value, so train your staff on servicing your customers above and beyond the minimum required so your company is seen as highly valuable in your locale.
3) You’ll need to know your monthly expenditures and have these written up as a budget from which to plan with. It must contain ALL COSTS on a monthly basis.
4) Keep a tracking system in place to predict future income. These are Income Projections ONLY and not to be inferred as the basis for spending! You never spend money because “you plan an amount of reimbursements next month from Medicare”; you spend only based on the amount of money actually deposited and cleared in one’s bank account(s).
5) As the executive and owner you set aside the time to look into the future with regards to expenses, income, marketing, etc. at least for the full year. Looking and planning ahead is an executive duty – one cannot work only in the present. This duty extends into researching new or potential avenues of income, new services, or products that if added to your current lineup generates increased interest and potential income.
6) Reimbursements are another area most owners abhor; most would rather not deal with it at all! It’s definitely easier to have someone that completely takes care of this, but this can be an area of lost income which is vital for an owner to understand, oversee and not lose sight of. Most owners would rather not face it; my advice… the best thing an owner can do is just the opposite… learn how to face it!
You, as the owner should know as much or more than the person you have handling the area ensuring their job is done in the most efficient and effective way possible which includes minimal loss. You should be fully able to govern the area, not necessarily do the work, but this most decisively entails one’s ability to face it fully.
It’s not that difficult once the vital points are understood and efficient means are put in place. There ARE proven methods to improve reimbursements and this is another area in which we are here to help you.
7) When you make a profit the first thing NOT to do is run out to buy something, It’s pretty wild but predictable to watch an owner get purchase-happy when their income increases – they almost immediately add new monthly expenses such as a car or software, etc. usually involving additional monthly payments extending years into the future.
The first thing you should do with profits in hand is to pay off as many debts as possible and reducing their amounts to their lowest levels. If you did this bit by bit, you’d be in a very pretty financial position before too long. That bettered position guarantees a better future for you and your company!
8) MOST IMPORTANT: You must know the math of your business and how it calculates into scenarios of needed production and required levels of income. Things such as: Patients per week; visits per week, cancellations per month; charges per visit; therapist costs per visit, etc. How then do these interrelate and determine your bottom lines of income, production, profits and growth potential?
Knowing how the above is calculated and analyzed you can determine or project what is required to meet / exceed your weekly financial needs AND maintain profitability. Only then can you truly manage your staff to improve your income vs. spending ratios and create what’s needed for future growth.
You are not alone in this endeavor. Most business owners can use assistance in various aspects of their company. We want to help you to succeed, make profits, pay yourself well, and spend more time with your family. Why else are you in business?
If you need some help give us a call!
Survival Strategies Inc.