In physical therapy, private practice owners are typically also treating physical therapists. Meaning, they’re healers first and foremost, and they’re also managers, leaders, trainers, marketers, receptionists, etc., etc.
If this sounds like you – just know that you’re not alone going through the School of Hard Knocks. Running a business is extremely challenging and there are so many factors that determine your success.
One of the biggest areas of weakness among private practice owners is budgeting. Unless you have a financing background, setting, managing and following a budget can be a like foreign language. For many owners who choose not to follow a budget in their business… it’s the kiss of death.
Today we’re revealing the five most common budgeting mistakes private practice PT owners make and solutions for these challenges. If this is an area you struggle in as an owner, let’s face this challenge together right here!
Not having a budget
This is a biggie. It’s amazing how many PT owners don’t even have a budget in place at all. This is ultimately a recipe for disaster because you’re not tracking where your money is coming or going. There’s no way to track profit and loss and you have no idea if your business is doing well.
The solution is simple: HAVE A BUDGET. Now, it’s not a simple task to accomplish, but it’s something that 100% must be done in order to manage your practice like a business and be successful. Not sure where to start? Hop on the phone with one of our FYZICAL Advisors – they can help!
No long-term budget
You may not realize how far into the future you should budget for. Most just budget one year at a time, but if you’re looking for any sort of progress or substantial growth, a one-year budget won’t cut it.
Here’s a little secret: you should budget for five years out. Specifically, budget for where you want to be on that fifth year, then budget backwards. By planning your budget this way, you can set five-year goals and plan accordingly each year leading up to it so you can reach those goals.
Not following realistic numbers
Say you currently operate a practice generating $500,000 in revenue but in five years you want to operate a $7 million-dollar practice. Let’s be realistic here, is this possible? It might be unrealistic, especially if you don’t have a plan you’re confident in.
Set realistic, achievable goals. Undoubtedly, it’s OK to be ambitious! Just make sure you set numbers that you feel confident you have the skills, tools and knowledge to get there.
Budget is too vague
Setting a vague budget can be just as ineffective as not having a budget at all. Great, you’re budgeting to generate $750,000 in 2019 but how are you going to get there? What percentage will be cash? What percentage will be new patients? Return patients? How will you spend your marketing dollars? What about employee expenses?
There are so many things you need to consider, otherwise setting a vague budget will get you nowhere. You need to budget each year down to the employee in your practice. Click here to see some basic numbers your budget should include.
Not analyzing the budget frequently enough
Lastly, one of the biggest mistakes private practice PT owners make when budgeting is not analyzing their budget quarterly. Only reviewing your budget once a year will make it much more likely for you to get off track.
You need to make time to crunch numbers every quarter and take your time doing so. Analyze where you are in that quarter and how it relates to your overall budget. If you’re over budget, this will allow you to take the necessary steps to correcting during the next quarter.
A budget is the financial guide you set up for your business and the future of your business. Without it, your PT business can’t be successful, and it most definitely can’t grow efficiently. If you’re guilty of any of these common budgeting mistakes in your practice, you need to schedule a call with a FYZICAL Advisor today. Our advisors will assist to ensure you budget correctly and have the tools you need to run your practice like a business expert.