Keep a look out for my up coming mini blog post series covering the top 5 ways to ensure financial destruction and maximum financial crisis in your Allied Health or Psychology business. Feel up to the challenge?
The financial destruction or a "failure to fly upwards" of your Allied Health business is easier than you think. My tips from the frontline and real world examples from decades of supporting and doing Bookkeeping for Businesses in crisis will help any allied health business financially self destruct. Heck I might even expand it from 5 ways to the top 10 ways there is so many of them.
Best of all you don't need any financial training or a high priced $15k - $30k a year business advisor or business coach or a high priced $20k - $30k a year accountant to assist in the destruction process although they can help speed up the failure process significantly and divert money away from paying yourself to them, which is helpful, and also one of the 5 key steps in assured financial hardship and launching your business into the depths of the abyss.
Here is a sneak of Step 1 of how to financially destroy your Allied health Business in 5 easy steps: Don't plan and don't have a budget - it's too stressful and takes too much time and is too "old school" Not having a monthly budget and budget to actuals report or any type of financial plan you actually look at and review regularly is a good starting place......but I'll unpack that helpful tip in detail in the upcoming free video series so stay tuned...
Quote:
" Planning is an unnatural process; it is much more fun to do something. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression!"
I've never seen such a high level of financial stress in the Allied health industry in medium and large allied health businesses and in particular Psychology practices, Occupational therapy practices and Speech Pathology practices. It really is a unique time and in my Bookkeeping practice client base and referral enquiry's we have shifted from having about 10 - 15 % of our clients or referrals in financial stress to nearly 30% over the last 3 - 4 years. From the constant stream of enquiries and businesses touching base with us for tips, support or a referral to one of the allied health specific accountants we work with and trust, the higher level of financial stress in my own practice group of bookkeeping clients seems to be mirroring exactly what's happening in the allied health industry at the moment.
Why is it happening ? I'm not the smartest cookie in the jar or the strongest brick in the wall (I had an existential crying crisis while trying to humanely say goodbye to my goldfish Mr. Lumpy the other month who was terminal - yep that's how I roll) but I do have some tips to share, not as an accountant or Advisor or coach, but as the bookkeeper - the behind the scenes person who codes the data for you and those other professional advisers. We don't normally step up and offer advice or analysis or tips but that time has passed and a change is coming...
Here is one of the things that might be adding to some of the financial stress and confusion at the moment in the industry:
Businesses aren't being supported or encouraged to learn and practise the basic skills and principals of running the financial aspects of a business themselves, and have contracted that out to high priced advisors. There has been a shift in the "power and ownership" of a businesses financial state and performance, and they are now being marketed and funneled into paying incredibly high commercial fees to advisors and coaches instead of learning how to analyse what is happening with the business themself.
Some of those key skills and principals that are now contracted out and aren't part of the business owners skill set or their internal staff include:
Budget | Designing and using an active budget and reviewing a "Budget to actuals" report each month or quarter |
Controlling expenses | Controlling expenses and making sure they are reasonable / in proportion with the sales income capacity of the business and comparable % wise to the industry average for other profitable and financially stable firms |
Knowing and tracking the profit margin of your staff | Knowing and tracking the profit margin per employee or provider (both before you employee them, and tracking this after you employee them) and making sure each Psychologist or OT or Speech Pathologist isn't just covering their own wages costs "plus a bit extra", but they are adding to your practices overall financial health and your own ability to pay yourself a professional wage that's commensurate with all your hard work in running the business. |
Know what is happening with the business financially yourself at all times | Being equipped to knowing what is happening with the business financially yourself at all times. Its your business - you deserve and need to have oversight of what's happening and not contract out that process to a high priced "someone else" or solely rely on that "someone else". I've seen waaaay too many businesses who are spending huge amounts of $'s on high priced business advisors or pricey accounting firms charging fees of $10k - $30k a year for advice or coaching on top of tax preparation and bookkeeping fees each year, year after year, for no change/ financial gain and some of those businesses are still are in serious financial hardship with no increased profit or financial stability. How could that even be possible? |
Sustainable weekly capacity of the business is to pay yourself | Knowing and calculating exactly what the sustainable weekly capacity of the business is to pay yourself or draw from the business. |
Reports that are meaningful and easily understandable | Accessing and using a Bookkeeping and accounting system that produces reports that are meaningful and easily understandable and are regularly updated and reviewed. (No i don't mean paying someone $10k - $20k a year to hook up Fathom or Spotlight to your XERO data that you or the Bookkeeper have already 99% coded, I mean getting help setting up and configuring XERO so you can access and understand your own financial reports). |
What doesn't seem to be part of the problem? - referrals
What's fascinating is that for the majority of the financially stressed allied health businesses I've talked to, supported or been the Bookkeeper for, client referrals have NOT been the issue. The work and clients are there and the volume of work and clients available is substantial, despite all the changes and uncertainty with the NDIS and the increase in living costs for the community. so what is going on...? As we go through the mini videos series on "How to financially destroy your Allied health Business in 5 easy steps" I will outline what some of the current issues happening right now are in - real world examples of what's happening to cause financial stress, and real world ideas of how to recover from that and a pathway forward. If I can, I will also design some low cost easy systems or tools you can use to help you financially model your own practice, so you can reduce the cost of your professional advisors and upskill yourself.
What if you are a Business coach or Business Advisor to an Allied health practice?
If you are a $15,000 - $30,000 a year business consultant, business advisor or business coach for an allied health businesses who is reading this blog post and you have charged them this advice and coaching fee on top of any yearly accountants tax return fee they pay and for the last 12 - 36 months there has been no significant profit increase for the business, or no significant increase in the business owners take home pay or drawings capacity of the business, or no significantly increased financial stability or reduction in the businesses ATO debt level and/or your system to help them is incredibly complex including making them establish and keeping track of 8 or 13 or 27 bank accounts and 12 variables and "things to do" driving their Bookkeeper (that's me) NUTS...
....could I beg you to maybe halve the fees you are charging them and assess if you are substantially helping the business (especially financially). Bookkeeping firms and independent Registered BAS Agent Bookkeepers are tired of coding monthly consulting and business coaching fees of $2000 - $3000 per month which is basically a half to a 1/3 of a Bookkeepers entire yearly fees to a business, but some advisor firms are charging that in 1 single month. If your advising an Allied health business, you've picked to advise an industry full of genuine caring business owners that support the most vulnerable part of our communities and that deserves and warrants careful thought and attention, and asking yourself:
Is the fees I am charging equivalent to the change I am assisting the business to make
Is the overall yearly benefit to the business - especially financially - greater than the yearly fees I am charging them
If that answer is no, or their has been no significant change in the business financially upwards in the last year or 2 of you advising them then clearly that's a failed value proposition and either you or the business aren't a good fit for each other maybe? I'm not sure to be honest - not my area of expertise, but something inside me says that doesn't pass the "pub test". If i was paying a specialist Doctor $20 - $30k a year for 2 years for help with an injury that was knowable, quantifiable and has good prospects of recovery but my injury didn't get any better after spending $40k -$60k over a few years......
Thankfully there is good advisers and coaches out there, and their is also allied health firms that are in recovery and rebuild mode and emerging out of financial stress and crisis AND their is also a % of practices that are thriving, but the accounting industry (including my Bookkeeping practise) really need to start leading and promoting the change of training, encouraging, growing business owners to understand and model their own financial data and financial state, and reduce this trend of charging incredibly high fees for little financial gain of the business. We don't want to just see a growth in advisory firms profit - we want to see a growth in allied health businesses profit, financial stability and especially their ability to support the community.
Feel up to the challenge of hearing how to financially destroy your Allied health Business in 5 easy steps? If yes, keep an eye on this blog over the next few months for the mini videos series
Wes