Dear Healthy Bodied of Finance,
I’ve been running my chiropractic practice for four years now, and things are going smoothly. My patients are happy, my team is growing, and financially, we’re in great shape. I have a reliable bookkeeper who keeps the numbers in check and a tax accountant who makes sure everything is in order come tax season.
However, I feel like there’s always room for improvement, and I want to ensure that I’m managing the finances of my practice as effectively as possible. Are there any financial management strategies I can use to continue running a healthy practice and prepare for future growth?
Sincerely,
Chiropractic & Curious
Dear Chiropractic & Curious,
First, congratulations on building a successful practice that’s thriving and financially sound! It’s fantastic that you’re looking ahead and thinking about how to sustain and grow your business.
Financial health is critical to long-term success, and even though you’ve got the basics covered by a solid bookkeeper and tax accountant, there are specific additional financial management strategies you can consistently implement to ensure your practice continues to flourish.
Let’s dive into some of these strategies that can help you stay ahead of the game:
1. Cash Flow Forecasting: Stay Proactive
You’re already financially healthy, but keeping an eye on future cash flow is crucial. Cash flow forecasting helps you predict the inflow and outflow of cash over the coming months. It allows you to anticipate slow periods, plan for significant expenses, and make intelligent decisions about when to invest in growth or new equipment. A detailed cash flow forecast helps you stay on top of your practice’s financials and ensures you’re never caught off guard by unexpected expenses.
2. Budget for Growth: Allocate Your Resources Wisely
If you want to grow your practice by adding new locations or expanding your staff, you’ll need a budget that allows for that. It’s not just about covering your current expenses—it’s about setting aside funds for growth. A detailed growth budget will help you allocate resources where needed without stretching your finances too thin. This type of financial management ensures that your expansion plans are sustainable and that you’re not compromising the health of your existing practice.
3. Track Key Performance Indicators (KPIs): Measure What Matters
Track Key Performance Indicators (KPIs) related to financial management to ensure your practice continues to run efficiently. This goes beyond just monitoring revenue. Look at patient retention rates, average revenue per patient visit, and the cost of acquiring new patients. By tracking these KPIs, you can identify trends, see where improvements can be made, and make more informed decisions about where to invest your time and money.
4. Debt Management: Keep It Balanced
While managing debt can be a delicate balancing act, it’s key to financial management. If you have any outstanding loans or lines of credit, now is the time to evaluate how you manage that debt.
Strategic debt management helps you maintain financial flexibility while still meeting your obligations.
5. Build and Maintain an Emergency Fund: Be Prepared for Anything
A solid emergency fund is a cornerstone of sound financial management. As you continue to run your practice, you never know when unexpected expenses or slow periods might arise. Having an emergency fund in place—typically 3-6 months’ worth of operating expenses—can act as a financial cushion, providing reassurance and peace of mind during tough times. It ensures your practice can continue running smoothly, no matter the challenges.
6. Proactive Tax Planning: Beyond Just Filing
While your tax accountant handles filing and compliance, proactive tax planning throughout the year is critical to financial management. Meet with your tax accountant regularly to discuss potential tax-saving strategies, such as taking advantage of business deductions, retirement contributions, or equipment depreciation. Tax planning ensures that you’re not just compliant but optimizing your finances in ways that can save you money in the long run.
You’ve built a great foundation, but with these tools, you’ll be able to take your practice to new heights. Expansion, whether in locations or staff, will require financial foresight, and now you’re equipped to handle whatever comes your way.
Here’s to many more years of success and growth!
Financially Mindful,
Dangerously in Love with Finance
Mindful Financial Tips
By incorporating these financial management strategies, you’ll have a stronger grip on the financial health of your practice and be well-prepared for future growth. Whether it’s through cash flow forecasting, setting aside an emergency fund, or proactively managing debt, these strategies will keep your practice thriving and financially resilient.
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]