Finances

Why (and When) It’s OK to Stop Focusing on Practice Growth

By Adam Cmejla, CFP®

Nov. 20, 2019

From the moment we open our doors as business owners, one common theme is on all of our minds: how do I grow my practice?

We invest an incredible amount of time, energy and money to ensure as best we can that our top-line revenue and net income continues to track upwards.

However, at what point is it enough? Can one ever get to the point of “making it” in their practice, and thus, be in maintenance mode rather than growth mode? How does one know when they’re at that point, and how do you gain the confidence to change your mindset?

In conversations with many ODs over the years, I’ve noticed a few key indicators that may signal that your practice has reached a point where you might go so far as to limit the amount of growth. But how do you know when you’ve reached that point?

Are You Clear on Your Goals?
I know this is a clichéd phrase, but there’s a reason that it’s always brought up—it matters! However, I’m not talking about your practice goals (yet). I’m talking about your personal goals, specifically as it pertains to the “return on life” that you’re getting for the money that you’re making and whether you are living the best life you can with the money that you’re earning.

Those goals require being both qualitative and quantitative in your planning. You must be qualitative in the amount of money that you’re saving and managing your numbers in both your practice and personal life. How do you do accomplish that task? I’m talking about being on a B-U-D-G-E-T—but not in the traditional sense of pinching pennies and never seeing the inside of a restaurant, or other miserly actions. I’m talking about using a budget as a tool to become clear on your goals.

Quantitative Goals
I would assume that many of you have an annual budget in your practice. You use this budget to project the cost of operating your business, what cash flow needs to look like on a month-to-month basis, what your estimated profitability is going to be, and basically telling your dollars where they go with intention rather than just blindly spending them ad hoc.

One of my favorite reports to run in a practice is its “Budget vs. Actual,” which basically layers a current profit-and-loss statement over the practice’s estimated budget to see how on track the practice is in the various areas. As Peter Drucker said in his book “The Practice of Management,” “What gets measured gets managed.”

But do you have an annual personal budget? If we agree that all the reasons listed above are why you set a practice budget, then why wouldn’t you set a personal budget? Part of the reason that you use a personal budget is so that you understand what you need your practice to produce for you in both earnings as a clinician, as well as profitability and a return on equity as a practice owner.

It’s important to know that your personal budget needs to include all of your expenses, including those that we would consider “add-backs” into the practice (personal expenses that are justifiably paid by the practice, such as retirement-plan contributions, cell-phone expenses, etc.).

While there are certain strategies that will be paid by the practice in the practice, some of your personal budget should be your personal-savings strategies. This would include vehicles such as:

• Roth or Traditional IRAs
• 401(k) or SIMPLE IRAs (your contributions as an employee within your practice)
• 529s (for child/ren higher education)
• Other brokerage or non-retirement investments

This is one of the most important lessons I learned from my grandparents: “Let your saving habits dictate your spending habits.” These item(s) need to be included in your personal budget. Once you’ve accounted for these annual savings, you can now feel comfortable and confident in spending the remaining dollars however you see fit—without the feeling of wondering whether you’re sacrificing your future for today’s pleasures.

I also want to clarify something here: I’m not talking about using a budget so that you can become surgical on how much you spend on “Entertainment” on a monthly basis (dining out, concerts, Netflix, wine tastings, etc.) down to the nearest $1. If you want to manage your budget to that level of specificity, that’s perfectly OK, and will make you that much more effective with your dollars.

I’m talking about having an operating budget that takes into consideration all savings mentioned above as well as all of your other fixed expenses like your mortgage, auto loans and other debt service, all forms of insurance, utilities, childcare, grocery (yes, this should be a relatively fixed expense) and charitable causes that are important to you.

Everything else should be measured on a discretionary basis and is more open for interpretation…but you still need to put guardrails around those discretionary expenses like entertainment, dining out, etc., so that you can manage your cash flow.

Qualitative Goals
On the qualitative side, you must understand what brings you true joy in your practice. I’m fond of asking ODs the following question: “What brings you more joy—working IN the practice or working ON the practice?” Their answer will tell me a lot about what their personal and professional financial plan should look like going forward.

For some, it’s working on the practice. This is the business side of things, including activities such as team management, advertising and marketing, community outreach, implementing systems and processes in the practice to help the operations not only run smoothly and efficiently in that practice, but also as possible preparation for expanding into multiple locations.

This is the high-level, strategic thinker. These are the ODs who have visions of splitting their time between clinic and practice work, hiring an associate(s), possibly opening up another location and making other expansion-oriented moves. I would call these “enterprise practices.”

Then there are other ODs who would answer unequivocally IN the practice. They love the clinical care and all that goes with being an OD and they run their practice because it is the means to live the life they want, but if they are honest with themselves, they’d rather not worry too much about the business side of the practice, so long as the basics are met and everything continues to run smoothly. I would consider these to be categorically named “lifestyle practices.”

Neither answer is right or wrong, nor is one better than the other. That’s the beauty of owning your practice—you get to decide! But you must be clear on who you are and what brings you joy. When the vision is clear, the decisions become easy.

If your vision is to make enough in the practice to fund your long-term savings plans as mentioned above, experience quality of life today that brings you joy and balance and work on the terms that you set, then once you accomplish those tasks I would challenge the OD to give me another reason supported by evidence as to WHY they would continue to grow.

I know we’ve all heard the phrase in business, “if you’re not growing, you’re dying.” I realize that all practices face a certain level of patient attrition on an annual basis, and I’m not suggesting that you should turn away all new patients.

But I do feel that practices can get to the point of intentionally taking their foot off the gas as it relates to direct business development ideas (and thus reduce possible expenses in the practice). Whether it be Google Adwords or Facebook marketing campaigns, direct mailers and postcards, Groupon or Living Social, community events, or other ideas, all of these strategies should be questioned if the practice owner is clear and confident in their personal vision and plan, which invariably drives some of the practice decisions that are made.

It’s been my experience that ODs get stuck in the day-to-day grind of running their practice so that they sometimes struggle to take a step back, evaluate their own PERSONAL progress and understand whether the practice is currently satisfying their personal life.

I call this place the “messy middle” of practice ownership. It takes a sense of intention and commitment to hit the pause button on life and go through deep personal and self-reflection to ensure that your actions in the practice are in alignment with your life’s intentions. Sometimes it just takes someone giving you permission to ask the question “What if?”

As I said before, when the vision is clear, the decisions become easy.


Adam Cmejla, CFP®
is a CERTIFIED FINANCIAL PLANNERTM Practitioner and Founder of Integrated Planning & Wealth Management, LLC, an independent financial planning & investment management firm focused on working with optometrists to help them reach their full potential and achieve clarity and confidence in all aspects of life. For a number of free resources, visit https://integratedpwm.com/ebooks/ and check out the “20/20 Money Podcast” on Apple Podcasts or your favorite podcast platform to get more tips on making educated and informed financial and business decisions.

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