Podcast (group): Play in new window | Download | Embed
Could what you think is a revenue problem in your private practice be something else? Can you confidently answer the question: “Is my business scalable?” How should you break up your profit and loss statements to finally see what is actually going on with your numbers?
In this podcast episode, Brandon Shurn and Arron Bennet discuss how to use your numbers to scale your practice.
Podcast Sponsor: POP Consulting
Whether you’re starting a solo practice, thriving in solo practice, getting a group going, or thriving in a group! Or launching a big idea, or thriving with your big idea, we have a consultant that can help you.
With our team, we continue to grow to have consultants that will help you at every single phase of practice.
If you want to apply to have a 30-minute pre-consulting call with me, I would love to chat through where you’re at.
Meet Arron Bennet
Arron Bennett is the founder of Bennett Financials, a fractional CFO and strategic tax planning firm that helps service-based businesses use their financial data to make better decisions and scale with confidence. With more than 15 years of experience in finance and business development, Arron specializes in profitability, cash-flow optimization, tax planning, and growth strategy. He is a Certified Profit First Professional and Forbes Finance Council Contributor, and developed the 60/15/15 framework to help business owners understand their numbers and build a clear financial roadmap for growth.
Visit Arron’s website and connect on Facebook, Instagram, and LinkedIn. See also, Bennett Financials.
In This Podcast
-
Why most PLS are wrong
-
Track clients coming in and repeating purchases
-
How to use your CFO as a navigator
-
The five numbers that predict your revenue
-
Arron’s takeaway for listeners
Why most PLS are wrong
Arron makes a strong statement: most business owners are doing their profit and loss statements incorrectly.
Most [profit and loss statements] are built to do a tax return. The way that you build a PL is to be able to make decisions versus how to build it to do a tax return is completely night and day different. (Arron Bennet)
To do a profit and loss statement correctly, you need to build it out in a way that you can easily see:
- How costs get broken up
- Marketing costs
- Payroll percentages
- General and administrative costs
You want to get as close as possible to the numbers that:
1 – Honestly show you how much offering the service costs, including everything that you pay for to bring the service to your clients.
2 – How much marketing costs you to bring in these clients who then purchase your offerings and services.
This is where Arron designed his 60-15-15 framework.
The framework is like a barometer. It’s like, “Are we in a good position if we bring in our PLS and it’s broken up correctly?” Most … firms [and businesses] that we take over the books of don’t break up the cost of goods sold correctly. (Arron Bennet)
Track clients coming in and repeating purchases
An enormous part of strengthening and deepening your understanding of your practice’s revenue cycle is knowing:
- How and what successfully brings clients to your practice
- How many times they book sessions with you on average
- How often they may return in a cycle, whether it’s a few months or a few years
These numbers will help you understand the lifecycle of your revenue system and prepare for each year that comes to bring in enough business.
You need to know how many times someone, whether they are a new or already existing client, returns to your practice. If you aren’t tracking that number, you are leaving a large part of your revenue cycle to chance.
You shouldn’t hide from your data. Your data is just your data, and what you do with the data is the scary part, because people will sit on it or they won’t confront it. (Arron Bennet)
How to use your CFO as a navigator
Traditionally, CFOs were the ones who pulled the CEOs back from the ledge before they jumped into new ideas, offerings, or services, citing the omniscient profit-and-loss statement. That is no longer the case in modern business.
These days, Arron argues that good CFOs are navigators. The CEO explains the goal, the CFO gathers data, they discuss what is reasonable and feasible, and then build the financial map towards that goal.
In this way, the CFO navigates the path to realize your practice’s potential.
But to be successful in this journey, you must track your data.
Two companies. One tracked their data; one did not. They had both been with me for the same amount of time. The one that tracked their data, [allowing] me to build that map, we are now at $12.5 million. The one that refuses to confront their data … is still stuck at $2.5 million. Same types of companies, the same growth trajectories. The difference is that this one could work out what their bottleneck was. (Arron Bennet)
If you know what your data is, you can grow a company, and you can help more people than the one that is stuck simply because they avoid their data.
The five numbers that predict your revenue
1 – Customer acquisition cost
2 – Churn rate of customers
3 – Payback period of the customer acquisition
4 – J-curve, which is how long it takes after you hire someone to break even with the new clients they can see
5 – Understanding your client lead flow
Arron’s takeaway for listeners
Break your books up. Make sure your cost of goods sold includes your delivery costs, payroll, and all associated costs to deliver the service. Break up your marketing costs, general and administrative costs.
Once you break everything up like this, only then can you start to make some clear decisions.
Useful Links:
- Work with us
-
Visit Arron’s website and connect on Facebook, Instagram, and LinkedIn. See also, Bennett Financials.
Check out these additional resources:
- Are Your Money Beliefs Holding Your Practice Back with Audrey Faust | GP 341
- Practice of the Practice Network
- Group Practice Launch
- Group Practice Boss: www.practiceofthepractice.com/grouppracticeboss $149 a month
- PoP Group Practice Owners Facebook Group
- Free resources to help you start, grow, and scale
- Work with us
- Practice of the Practice Network
Meet Prof. Brandon Shurn
Brandon Shurn, Ph.D., LCPC, LMHC, AFC®, NCC, is a licensed clinical professional counselor and the founder of EmPower Me Holistic Counseling, a fully virtual Maryland-based practice. He’s also a full-time professor in Seattle University’s online Clinical Mental Health Counseling program. With extensive experience launching and directing university training clinics, Brandon now focuses on helping therapists design and grow impactful, sustainable practices. Outside of his work, he enjoys fitness, yoga, Wing Chun, golf, reading, and spending time with his family and dogs.
Visit Empower Me Counseling, and connect with Brandon on Instagram and LinkedIn. Email him at: brandon@practiceofthepractice.com
