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Growing revenue by using a key business number
By Adam Cmejla, CFP®
May 28, 2025
Attend any optometry conference or poke around online forums about how practice owners measure their success, or what they aspire to hit as a target, and it almost always starts with top-line revenue:
“I want to be a million-dollar practice.”
“We’re aiming for $1.5 million in collections this year.”
“Eventually, I want to break $2 million.”
But revenue alone doesn’t mean much unless it supports the life you want to live. It’s not about what the business makes—it’s about what you take home and what that income allows you to do outside the exam lane.
The most successful optometric business owners don’t build their practices forward—they build them backward. They start with their personal income target, then reverse-engineer the practice’s revenue and key performance indicators (KPIs) to support it.
This is the story of how Dr. Smith did exactly that—and how you can, too.
Meet Dr. Smith
Dr. Smith owns a solo private practice. She’s in growth mode, but she’s also a parent, wants to take more time off and has a goal to fully fund her retirement accounts every year.
After meeting with her CERTIFIED FINANCIAL PLANNER®, she determined that she needs to consistently take home $20,000 per month to fund her family’s lifestyle, cover taxes and hit her savings targets.
That adds up to $240,000 per year in owner income.
This isn’t an arbitrary number. It’s a reflection of the actual life she’s working to support—mortgage, kids’ activities, taxes, vacations, health care, Roth IRAs and other investment accounts like 401(k)s, and everything in between.
But instead of saying, “Let’s just work harder and hope there’s enough left over to fund all of those items,” she approached her business like a CFO and started with the number that really mattered.
Step 1: Start with EBOC
EBOC stands for Earnings Before Owner’s Compensation—and it’s the most important profitability number you’re probably not tracking.
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Think of EBOC as the bucket from which you—the owner—get paid. It includes:
- Your W-2 salary
- Any distributions or draws
- Retirement plan contributions
- Health insurance premiums and other fringe benefits
- Any other ways in which the owner personally and financially benefited from the practice
In a healthy practice, EBOC should be at least 25% of total revenue (but we’d ideally love to target 30%). For the remainder of this article, we’ll use 25%.
So, if Dr. Smith wants $240,000 per year from her business, and the business runs at a 25% EBOC:
$240,000 ÷ 0.25 = $960,000
That’s the top-line revenue target.
If her practice doesn’t collect at least $960,000 annually, it simply can’t pay her what she needs—unless she’s overspending the business or running it inefficiently.
Step 2: Break It Into Actionable KPIs
Now that we know what EBOC number we are solving for and the target margins required to generate that number, we can start working from the top down. Let’s start with the revenue per OD hour that needs to be generated based on the number of clinic hours available.
Revenue per OD Hour
Dr. Smith works four clinical days per week, eight hours per day and takes four weeks off annually. That’s 1,536 OD hours/year.
To generate $960,000 in revenue, she needs to average:
$960,000 ÷ 1536 = $625 per OD hour
That’s her new benchmark.
Alternatively, we could look at a different lever to pull in order to attain the same revenue number. Let’s say Dr. Smith wants to reduce to three clinical days per week but still hit her target income goals. That gives her 1,152 OD hours/year. Given that we’re reducing one of the factors (clinic hours per year), it only makes sense that we’d have to increase the other factor in order to end up with the same product. To still hit her goal:
$960,000 ÷ 1152 = $833 per OD hour
Now that we know the top-line revenue, we can begin stewarding those dollars through the various operating expenses that will be incurred by the practice.
Gross Profit Margin (via COGS)
The direct expense associated with running an optometry practice is COGS (Cost Of Goods Sold). After all, to sell a pair of glass and collect that revenue, we must first spend money to purchase frame inventory.
Let’s say Dr. Smith’s COGS runs around 25% of collections:
$960,000 × 25% = $240,000 in COGS
Gross profit = $720,000
Gross profit margin = 75%
Overhead Expense as % of Revenue
Once we take COGS into consideration and have a target gross profit margin, we look at all of the other operating/overhead expenses of the practice. The target number here should be somewhere around 45%. By taking these two numbers of direct expense (25%) and operating expenses (45%), we can end up with our targeted EBOC of at least 25%.
Step 3: Time vs. Income Tradeoff
As Peter Drucker, author of “The Practice of Management” famously stated, “What gets measured, gets managed.” To set the aforementioned KPIs without having a tracking system in place is nothing more than a glorified wish.
Begin tracking these KPIs daily, weekly and monthly to identify areas where the practice can improve the drivers of revenue. Examples of this could be increasing the schedule fill rate, capture rate, annual supply sales and continued discussions with vendors to reduce costs where able.
Conclusion: Your Next Best Steps
Dr. Smith’s story isn’t unusual. She’s a hardworking optometrist who simply wanted clarity: how much does my practice need to produce so I can live the life I want—with confidence, without guilt and with enough margin for the future?
Instead of chasing an arbitrary revenue goal or comparing herself to other practices, she focused on what matters: the number that supports her life. That clarity allowed her to make smarter decisions about her schedule, pricing, staffing and long-term strategy.
This approach isn’t about working harder or longer. It’s about being intentional with how your business is structured and how you measure success. Revenue is a means to an end—not the end itself.
By starting with your personal income needs and reverse-engineering from there using EBOC, you gain control over your business instead of letting it control you. You build a practice that serves your family, your future and your goals—not just one that collects more each year without direction.
Whether you’re in growth mode, thinking about succession planning, or just trying to reduce your stress, this mindset shift can completely reshape how you operate—and why.
Next Best Steps
1. Calculate your annual income need, including taxes and savings.
2. Divide that number by 25% to find your top-line revenue target using EBOC.
3. Break that revenue into key KPIs—revenue per OD hour, gross margin, staff cost %.
4. Adjust accordingly—through improved pricing, better efficiency or strategic hiring.
5. Monitor monthly. Adjust quarterly. Celebrate yearly.
Read another article in Review of Optometric Business by Adam Cmejla
Adam Cmejla, CFP® is a CERTIFIED FINANCIAL PLANNERTM and Practitioner and Founder of Integrated Planning & Wealth Management, LLC, an independent financial planning & investment management firm focused on helping optometric practice owners nationwide “plan life, on purpose” by providing personal and professional CFO services. Check out the “20/20 Money Podcast” to get more tips on making educated and informed financial and business decisions, be the first to know when his new book How to Buy an Optometry Practice is released, and the “20/20 Money Membership,” built to help ODs become brilliant at the financial basics.
