Four-Part Series with Accountant Julie Herres, Part 2: Budgeting and Forecasting for Your Group Practice | GP 08

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Four-Part Series with Accountant Julie Herres, Part 2: Budgeting and Forecasting for Your Group Practice | GP 08

Do you know the difference between a budget and a forecast? How do you start setting up a budget? Are there budgeting mistakes you should be avoiding and how important is it to have a forecast?

In this podcast episode, Alison Pidgeon speaks with Julie Herres about budgeting and forecasting for your group practice.

Meet Julie Herres

Julie Herres is the owner of GreenOak Accounting. The firm provides bookkeeping, accounting, payroll, Profit First services to private practice owners throughout the United States.

Julie and her team have worked with hundreds of private practice owners, so they are uniquely positioned to be a trusted advisor to clients.

To get more information on GreenOak Accounting’s services or to schedule a free consultation, visit or connect on LinkedIn and Twitter.

In This Podcast

  • Difference between a budget and a forecast
  • Where to start with a budget
  • Budgeting mistakes
  • Setting aside % for profit
  • Why you should do a forecast

Difference between a budget and a forecast

  • Budget: the expenses you know you’re going to have (rent, software, admin team) and try to make a guideline for future months.
  • Forecast: used in tandem with a budget, but to project out a new situation such as maybe adding clinicians to your practice.

Where to start with a budget

Start with a personal budget, as when you know what this is then you know how much you need to take home to maintain your household.

Budgeting mistakes

  • Having a tendency to do just the minimum, realistically in the long term you will have to make additional purchases
  • Look at the last 12 months in case there are big once-off costs
  • Look at expenses once a quarter in the event that there are automatic subscriptions
  • Underestimating how much you’re taking out of the business

Setting aside % for profit

  • Profit: 20-25%
  • Admin expense: 5-10%
  • Overheads: 20-25%
  • Therapist’s pay (clinicians other than the owner): 45-55%

Why you should do a forecast

Forecasting is especially helpful in a group practice because it deals with the ‘whats if’s’.

What if you add another location, hire another clinician, add benefits to the team, etc.

Sign up for free consultation and 5 days of profit-boosting tips for private practice by clicking here!

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Meet Alison Pidgeon

Alison Pidgeon | Grow A Group Practice PodcastAlison is a serial entrepreneur with four businesses, one of which is a 15 clinician group practice. She’s also a mom to three boys, wife, coffee drinker and loves to travel. She started her practice in 2015 and, four years later, has two locations. With a specialization in women’s issues, the practices have made a positive impact on the community by offering different types of specialties not being offered anywhere else in the area.

Alison has been working with Practice of the Practice since 2016 and has helped over 70 therapist entrepreneurs start and grow their businesses, through mastermind groups and individual consulting.

Thanks For Listening!

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Podcast Transcription

[ALISON PIDGEON]: Starting a group practice can be really overwhelming. So, if you’re wanting some help to figure out how to start and grow a group practice, please go to and click on Work With Us. There you’ll find information about everybody on the Practice of the Practice team, including me. I specialize in helping people grow a group practice, and I would love to work with you. So please fill out the contact form on the website or email me, [email protected].
Welcome to the Grow a Group Practice podcast. I’m so glad you decided to join me today. We’re doing a special four-part series with Julie Harris, who is the owner of Green Oak Accounting. She is an accountant who specializes in helping therapy practices and she has so much and great information that I asked her to do a four-part series on the podcast. So, if you’ve been following along, hopefully you’ve already listened to episode number one, which was all about getting your head out of the sand about your practice financials. And then today we’re going to be talking about budgeting and forecasting for your group practice. And if you’re interested in learning more, Julie is going to join us for episode three and four. Episode three is compensation in group practice and then episode four is all about profit first. So, I know that’s always a popular topic in Facebook groups about how to implement profit first, so definitely check out that episode as well.
[ALISON]: So today in terms of our topic of budgeting and forecasting, I really think the forecasting tool that accountants are able to use is so important on so many levels in a group practice. It’s going to help you to know how to grow, and also can help you figure out what to pay your therapists. It can give you all kinds of great information. Should you expand? Should you buy a building? You know, what’s the timing of all those things? So I’m really glad that she’s talking about this because I think so many times we want to make changes in our business, or we want to expand, or we want to hire more people, but we really have to get the numbers right to make sure that we’re going to obviously be able to pay our people and have a profitable business. So, she gives lots of good tips about budgeting and forecasting in this episode. Julie, thank you so much for joining us today.
[JULIE HARRIS]: Thanks for having me.
[ALISON]: Yeah, it’s great to have you back on the podcast. There were so many things when we initially talked that you, you know, we talked about that we could cover and then I was just like, “Oh, we have to do a whole series because there’s just so much good information that you can share with us.” So, I’m really glad that you agreed to do this four-part series for us. So today we’re going to be talking specifically about budgeting and forecasting for your group practice, and why don’t we just jump right in here?
[JULIE]: Let’s jump in. And I hope no one fell asleep when we said budgeting and forecasting because it is kind of a boring subject, but a necessary one for business owners and we’ll try to make it make it fun, right?
[ALISON]: Yeah, definitely. So maybe we should just start out with, if you want to give us a little definition of like, what is the difference between budgeting and forecasting?
[JULIE]: So, when I look at a budget, what I’m usually trying to do is take one slice of time basically. So, like one month or one year, and look at the current situation and the known variables, right? So, like the things that you know, the expenses you know you’re going to have like rent, your software, your admin team, like whatever you know is going to happen, and try to make a guideline for future months. So, we could look at an average of your expenses over the last 12 months and make a budget for January and project that through for the rest of the year. So, you have a guideline of, you know, “How much can I spend on this? How much can I spend on that?” Then when I think of a forecast, that’s usually going to be used to like in tandem with a budget basically, but you project out a new situation.
So, we do a lot of forecasting in situations where we’re saying, “Okay, I want to add three more clinicians to my practice this year. What does that look like so we can project out the income, we can project out the expense?” Or, “I want to add a leadership team to my group practice or I need to move into a bigger space or I want to save money for a build-out next year.” So, we’re looking at your current situation, plus adding a layer of a scenario on top of it.
[ALISON]: Okay, great. So, going back to budgeting here, where, if someone’s never done a budget before, especially I think when you have a group practice, it gets more complicated. There’s a lot more moving parts. Like where would you recommend they start?
[JULIE]: I always like to start with a personal budget. And it seems, it sounds kind of counterintuitive, but when you start with a personal budget, then you know how much you need to take home to maintain your household. So what’s the minimum you need to take home to pay the mortgage, take care of the kids, get food on the table, and then we can start there because while we’re doing the business budget, I really want you, the group practice owners should be able to pay themselves and jumpy themselves what they actually need, not just this whatever’s left at the end. So, I like to start with the personal budget.
Then once we move on to the business budget, then we can start with the basics. So how much are you planning to bring in as far as income? Are you, we can back into you know, if you want to bring home $10,000 a month, how many sessions is that? Like, what are the known expenses that you have? And we start with the basic ones, the bare minimum, and then we can add in all of the other things, the fun things that, you know, changing the decor and so that we can see how those things all fit.
[ALISON]: Yeah, so it’s sort of like, let’s just start out with the minimum we need to make sure the business is like running and then maybe we can start to play with things in terms of like future goals or, “Yeah, eventually I want to increase my income,” or that kind of thing.
[JULIE]: Right, and we have a session calculator that we use to see how close we are to our goal basically, so, where we look at the budget and how much money we need to bring in versus, the session calculator, and that’s going to tell us if those things are in line. So just based on your average reimbursement rate from insurance, we can plug that in and see well, if you need to make, you know, if you want to bring in 15,000 or 30,000, for example, per month in the business, if you have only two clinicians that are seeing 15 clients a week, those numbers don’t line up right. So, like trying to map those things together, as far as what the budget is and how much money you need to bring in.
[ALISON]: Right. I think somebody told me once that your financials always tell a story. I think we get caught up in like, “Oh, this is just a bunch of numbers on a spreadsheet.” But if you start really looking at things, you start to see the story of what it’s telling you about your business. And I think that’s a great example of how, like, you know, okay, this number now is representing like, “Okay, now maybe I need to do more marketing to get more clients in the door or whatever the case may be.”
[JULIE]: Exactly. And you know, it’s a great thing to want to bring in a lot of, to bring home a lot of money, but if you’re like, let’s say you’re not willing to see more clients, then let’s find another way for that money to come in. But like all of those things have to be aligned and it’s not just a case of, “Well, I want it to happen, so it’s going to happen.” Having the data behind that, then you have a plan and that’s half the battle right there.
[ALISON]: Right, and then it really filters into, “Okay, what are my goals in the business?” So, when you see people who maybe have tried to do budgeting on their own, like, do you see them making some like typical mistakes or maybe they’re not including some things that they should include? What do you see in terms of mistakes they might be making with their budget?
[JULIE]: Well, so there’s a tendency to really go very bare bones, and that can be realistic for a few months where you’re really just doing the very, very minimum, but long-term, you know, chances are, you’re going to need to make additional purchases. So, I recommend just a realistic view and looking at the last 12 months, because sometimes there’s a, for example, a liability insurance payment that comes out once a year, but it’s a thousand dollars. If you don’t look at the whole year, you forget to put that in. But all of those things add up at the end of the year.
[ALISON]: Yeah. And the other thing I recommend often to people is to look at their expenses like once a quarter, because I think there’s a lot of times when we maybe have like automatic payments or like subscriptions, and then we don’t like go back to think like, “Oh, am I still using this thing? Should I still be paying for it?”
[JULIE]: Yes.
[ALISON]: You know, you just forget about it, because it’s like, “Oh, it’s 10 bucks. It comes out once a month. It’s no big deal.” But then like a year goes by and you’re like, “Oh, well there’s $120 down the drain for something I didn’t use.”
[JULIE]: Absolutely. That does happen a lot. And then as far as the, what people forget in the budget, I think they often underestimate how much they actually take out of the business. So, there’s usually less money left at the end of the month than they had thought that would be.
[ALISON]: And in terms of budgeting, is there like a certain percentage that, and I realize we were going talk about profit first in another episode, so we might get into this later, but is there a certain percentage they should be setting aside for profit?
[JULIE]: Yes. So, separate from profit first, in a group practice, I usually like to see the profit over 20%. That is a healthy profit because then there’s room for things to happen. If it slips a little bit, you’re still in a good place, profit wise, but usually it’ll fluctuate between somewhere between 20 and 25%. Admin expense, I usually like to see between five and 10%, overhead around 20 to 25% and then therapist’s pay, and that’s for clinicians other than the owner around between 45 and 55%. And that doesn’t mean that everyone is getting paid the same exact percentage, but it just means like there’s some people at a higher percentage, there’s some at a lower percentage and an average is around that number.
[ALISON]: That’s super helpful because I get asked that question a lot too. Like what should, you know, different parts of the budget, like percentages, how are they allocated? And I think you have like a pie chart where you sort of show in a visual what that —
[JULIE]: I do.
[ALISON]: Like, yeah, because I saw that on LinkedIn and I was like, “Oh, this is awesome.” Like I totally need this for my consulting clients because they ask me this question all the time. So, is that something that they can see like on your website or like if they want to look at that, how do they view that?
[JULIE]: Yes. So, we’re pretty active on social media. I think we have it on Facebook. I’ll make sure we add it on the website as well, but we, yes, so, we have that information available for everyone. And those ratios are different for group practices and for solo practices. So, the ones that, the ratios I gave you are for group practice. I think it really helps show you if something is off. Like for example, we have a pretty large group practice owner whose ratios were off in Q4 and we did a little bit of digging to see what happened because he was very, very heavy on admin, all of a sudden, which hadn’t been the case. And so, once we actually looked at the payroll reports and what happened, it turns out he hired an additional admin.
So, he was now at five admins and then at the same time, there were four clinicians who left the practice for various reasons like maternity leave or sick leave, who weren’t working basically in the practice. So that happening reduced the income produced significantly and increased the admin expense pretty significantly. So that really messed up the numbers. Well, by looking at what happened, we were able to figure out that doesn’t mean you need to fire the fifth admin right away. That just means like you have to hire more clinicians or, you know, they have, they’re coming back from leave, but the income has to increase in order for those numbers to be in line once again.
[ALISON]: So regularly looking too at how are those percentages working out can also help you make decisions again with goals and what you need to focus on in the business?
[JULIE]: Absolutely.
[ALISON]: Yeah. Very cool. So maybe we should switch gears here and talk a little bit more about the forecasting piece, because we kind of hit the highlights of the budgeting. But I think the forecasting is also really important. I know I’ve done this in my own practice when I’ve made really big decisions like with whether or not to expand. I did switch over my staff from contractors to employees recently and so I had an accountant do a forecast for me just to figure out what I could afford to pay them, because I didn’t want to pay them too much and get myself into trouble financially. So, can you tell us a little bit more about why a practice owner might want to do a forecast?
[JULIE]: Yes. So, I think forecasting is especially useful in the setting of a group practice because it can deal with all of the what ifs. What if I add a second, third, fourth location? What if I hire another clinician? What if I add benefits for example, to the team? If you’re adding a 401K or health insurance to the team? What if you’re moving into a larger space and need to do a build out? So, all of those things are going to affect the bottom line pretty significantly. Compensation structure change as well. So being able to look at what the financial outcome will be is really powerful, because then you can decide if that’s something that you’re willing to do.
[ALISON]: Yeah. So then in that process as well, like if, so, let’s say I plan to, like, I want to add a second location. So maybe right now I have one space with four offices and now I want to go across town and I want to open another location that has four offices. In addition, like, would you also be able to tell me, like you are going to need X number of dollars even just to get the space, like start it up because there’s startup expenses and then there’s obviously the ongoing expenses of running the office and paying the staff and all of that kind of stuff? So, is that something you calculate into that as well?
[JULIE]: Absolutely. We usually will look at the cashflow as well. So, making sure that you have enough funds for when you’re out looking for a space, that we’re able to calculate the forecast based on the price point of the spaces that you’re looking at, but also what is the deposit going to look like? Are they going to provide a credit for some of the leasehold improvements or do you have to pay for all that? There is known, there’s things that we know, like you’re going to have to furnish that space, you might need to hire an additional admin to go into that space, but then you’re also going to spend a lot probably on recruiting unless you have existing staff that’s also moving or that will be sharing their time, but typically there’s going to be some kind of recruiting. So, there’s a lot of things that we know. And we also know that it’s usually more expensive than you think anyways, so we can buffer part of that in, but we can take a look at the cash outlay too, and make sure that you’ve got enough available for that.
[ALISON]: Yeah, I think that’s so important because I think what I hear from other practice owners is if you’ve never done it before, like a lot of times what we recommend is like, “Okay, well, if you want to start a group practice, like you already have an office. So just start out by like hiring somebody to work when you’re not there and sort of see how it goes and like build from there.” So, they don’t have this experience of like, because it happened over such a long period of time, they don’t have the experience of like, you know, instant, like full office suite and like all the expenses that go along with that, especially the startup expenses. So that’s a question that I get a lot too, like, “Well, how much is this really going to cost to like start up this office?” And then when I say like, “Oh, well make costs between like 15 and $20,000.” They’re always like, “Oh my gosh.” Like they had no idea or they just didn’t think through how much it was really going to cost. So yeah, —
[JULIE]: If you go in knowing that’s very helpful from the beginning, because then you can look at, “Do I have that cash available? Do I have a line of credit? Like, how am I going to fund all of this?” Because you don’t want to do it at the expense of payroll or some other important expense
[ALISON: Yes. So, in terms of the forecasting, it sounds like there’s a lot of different variables. And obviously that can vary from business to business just depending on what your group practice looks like and what you’re trying to achieve. And obviously this is a service that you provide through your firm, but if somebody wanted to do it themselves, is there a way, is there like an easy sort of DIY way of doing that? Or is this something that really like, you should just hire an accountant and let them do it?
[JULIE]: Well, if you’re going to DIY you certainly can. You could go just pull up an Excel doc and start with your existing budget and then layer on different pieces there. I always think it’s a good idea to get some professional help just to make sure you didn’t forget a big piece and to get some reassurance over the whole thing, but you certainly can put something together in Excel. If there’s any kind of loans involved, they’re usually going to want to see something a little bit more formal, but something is better than nothing.
[ALISON]: So if you’re going to, let’s say the bank or something to get a loan, let’s say to open the second location, they’re probably going to ask you for some supporting documentation about how are you going to be able to afford to pay us back, right?
[JULIE]: Absolutely. They want to know they’re getting their money back.
[ALISON]: Right, right, right. Any other tips or thoughts about forecasting and how that can help us in our business or you know, just maybe things that folks haven’t thought about related to forecasting?
[JULIE]: Well, I think the forecasting is a great way to examine the ‘what ifs,’ but I also think there’s a lot of power to having a trusted advisor like you or a business coach or an accountant that can, that you can talk through different scenarios with. Because a lot of times we’ll have clients come to us saying, “You know, I really think I need more space this year and can you help us forecast that out?” And we can a hundred percent do that, but a lot of the time we’ll have the discussion and look at how much space they’re actually using right now and we’ll find that their space is actually vacant more than 50% of the time. And in that case, they don’t have a space problem. They have more of a scheduling problem. And so, they’re able to push back that big move and at big financial expense by just looking at what they have available right now in the business today. So, you know, there’s power in discussing those scenarios with someone else.
[ALISON]: Yeah, and I think there is such an advantage to like having, excuse me, somebody who has the outsider perspective and is looking at your business to notice things that you are seeing because you’re living and breathing it every day. Sometimes you don’t always see the forest for the trees and to have somebody who has a different sort of skillset or expertise to even just look at, you know, the snapshot of the data in your business and say like, “Oh, well, you’re really not utilizing all the space you have now. So, before you move, why don’t you ramp up, you know, utilizing this space that you do have?” And it’s just like such a simple thing, but you would be amazed at how many practice owners just don’t see it because you’re in the weeds,
[JULIE]: You’re in the weeds. And a lot of times it feels like the space is busy because some days, or some moments are busy, but then when you really look at the whole picture and the whole day and all the rooms that you have available, it really isn’t. And it’s surprising a lot of times for practice owners to hear that, but a lot of times it’s true.
[ALISON]: Yeah, definitely. Well, this has been so helpful, Julie just to talk through different tips around budgeting and forecasting. And next episode, we’re going to talk about compensation in group practice, which is such a huge topic. So, I’m really excited to talk with you about that. But before we get there, can you let the audience know how they can get in touch with you if they’re interested in talking more?
[JULIE]: Yes. So, if you would like to find out more about our services, you can go to You can sign up for a free consultation or you can also sign up for five days of profit boosting tips. That’s an email series. You’ll also get access to a lot of our Excel and Google sheet templates.
[ALISON]: Oh, awesome. Excellent. Well, Julie, thank you so much for joining us today.
[JULIE]: Thanks for having me.
[ALISON]: So, I hope you learned a lot from Julie and her tips on budgeting and forecasting for your group practice. I know every time I do an interview, I learn something new as well, and I’m really excited that we’re doing this four-part series because I think that getting your money and your financials really right in a group practice is so important. So, if you have been enjoying this series, hopefully we’ll see you again in episode number three, which is compensation in group practice. And then episode four, we’re going to be talking about profit first. So, see you there.
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