Dear Dangerous in Love with Finance,
I’ve been running my Chiropractic & Wellness Center for three years now, and while I’m proud of what I’ve built, I’m starting to feel like there are financial blind spots I may have overlooked.
Despite steady client growth, unexpected issues constantly hit my bottom line—whether it’s cash flow shortages, missed deductible payments, or surprise expenses. I know I’m not the only one facing these struggles, but it feels like I’m always playing catch-up. This ongoing financial strain is starting to wear on me. It’s affecting how I manage the business overall.
I’m wondering: what are the most common financial mistakes owners like me make after a few years in business? More importantly, how can I avoid these pitfalls so I can finally get ahead, manage my cash flow better, and stop feeling like I’m always on the back foot financially?
Sincerely,
Chiropractic Care & Financial Despair
Hi Chiropractic Care & Financial Despair,
First, let me applaud you for asking the question. No matter how long you’ve been in business, financial management is crucial. It’s vital for maintaining the financial health of your practice.
Financial management for chiropractors and wellness centers often gets sidelined in favor of patient care (which is understandable!). But here’s the harsh truth: if you’re not careful, financial missteps can quickly turn your wellness center into a stress center.
Chiropractors, like many in the health and wellness industry, often make a few critical financial mistakes. These missteps can hold their practices back from true financial success. But don’t worry, we’re about to align things financially. Let’s get your practice in top fiscal shape!
Cash flow is the lifeblood of any business, but for a chiropractic and wellness center, it’s even more crucial. The nature of these practices involves fluctuating patient volumes, insurance reimbursements, and unpredictable expenses. Understanding cash flow is more than just keeping an eye on your bank account—it’s about gaining insight into the ebb and flow of money moving through your practice, allowing you to make informed decisions about the future.
At its core, cash flow is the money coming in (revenue) and going out (expenses) of your practice. For a chiropractic and wellness center, revenue typically comes from patient visits, memberships, and potentially product sales. Expenses range from payroll, rent, and equipment costs to utilities, marketing, and continuing education. The challenge? Timing. Often, cash comes in slower than it goes out, which can create a strain if not properly managed.
This is where financial management comes in. A strong grasp of cash flow allows you to forecast when revenue will come in and match it against your upcoming expenses.
For example: Insurance payments may be delayed by 30 to 60 days after patient visits, but payroll and rent are due on time. By predicting these lags, you can set aside enough cash reserves to cover expenses when revenue is temporarily low.
You must track the progress of your business in the same way that you track the progress of your patients. It’s like running blindfolded when you don’t pay attention to your KPIs; you won’t know if you’re on the correct track until you run into a wall.
One of the most important KPIs for chiropractors is Revenue Per Patient Visit. If you don’t know how much money each patient visit brings in, how can you possibly set realistic financial goals? Other important KPIs include Patient Retention Rate, Profit Margins, and Staff Utilization Rates. Ignoring these is like skipping your patients’ follow-up appointments—bad news.
Here’s the thing: Start small. Choose two or three KPIs that are directly tied to the success of your practice, and track them regularly. Once you have these metrics on hand, you’ll know where to make improvements and where you’re already excelling.
And yes, a fractional CFO or outsourced financial accountant specializing in chiropractic and wellness centers can be your guide here, helping you implement a system to track these crucial numbers.
New equipment doesn’t always mean better care. Don’t get me wrong, having the right tools is essential, but many chiropractors fall into the trap of overinvesting in fancy equipment or upgrading to larger office spaces too soon. If you’re pouring cash into a state-of-the-art chiropractic table or leasing that 3,000 square-foot office you can’t quite afford, you’re setting yourself up for financial strain.
While the allure of shiny, new equipment is strong, if you haven’t yet developed a consistent patient base or aren’t generating enough revenue to cover these new expenses, it’s a recipe for disaster. This mistake often leaves chiropractors drowning in debt, scrambling to pay off hefty equipment loans or expensive lease agreements.
Here’s the thing: Take a step back before making any big purchases. Do a financial assessment to see if these investments are necessary for the stage your practice is in. You can always upgrade down the line once your practice has grown and stabilized. Financial management for chiropractic and wellness centers should include long-term planning, and this is where a well-thought-out budget can be your best friend.
Many chiropractors make the mistake of not planning for taxes throughout the year, leading to a mad scramble when tax season arrives. Worse, some might not be taking advantage of the tax deductions available to them, leaving money on the table that could’ve gone back into the business.
Not only does poor tax planning cause financial headaches, but it can also trigger stress, anxiety, and even IRS penalties if you’re not careful. And trust me, nothing aligns you with financial strain quite like an unexpected tax bill.
Action to Take: Schedule regular meetings with a tax professional who understands the healthcare industry, especially chiropractic and wellness practices. They can help you with tax planning, ensuring you’re setting aside the correct amounts, making estimated payments if needed, and maximizing your deductions. Don’t try to DIY your taxes—get the help you need to keep Uncle Sam happy.
Running a chiropractic and wellness center comes with its fair share of financial ups and downs. Whether it’s a slow season or unexpected repairs to your office, these moments can blindside your business if you’re not financially prepared. A big mistake chiropractors make is neglecting to build an emergency fund that can act as a financial cushion.
Without an emergency fund, one unexpected expense can throw your entire practice into chaos. You might find yourself tapping into personal savings or taking on debt to keep the practice afloat. Emotionally, this is taxing—it can make you feel like you’re just one bad month away from disaster.
Action to Take: Start small, but start now. Build an emergency fund with enough to cover at least three months of operating expenses, including rent, payroll, and utilities. This safety net will give you peace of mind and stability when unpredictable challenges arise.
Chiropractors who take a proactive, thoughtful approach to financial management can greatly improve the health of their practices. The key lies in balancing patient care with sound financial strategies, ensuring your wellness center thrives in every sense.
Yours in fiscal fitness,
Dangerous in Love with Finance
You’re on the right track by recognizing that financial management is just as critical to your practice’s health as patient care. Avoid these common financial mistakes, and you’ll not only keep your business running smoothly—you’ll also alleviate the financial stress that comes with them. A chiropractor’s strength lies in their ability to keep things in alignment, and the same goes for your practice’s finances.
This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax and accounting situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. Healthy Bodies of Finance is an accounting firm that specializes in working with health and wellness providers. We provide monthly accounting & bookkeeping services and financial education. For more information on our specialized services for health and wellness providers please contact us at [email protected]