What do solo and group practice owners need to know about shifting to the Profit First model? Which destructive money mindsets are keeping you back from becoming profitable? How can you minimize your expenses to pay your profits first?
In this podcast episode, Joe Sanok speaks about profit first for therapists with Julie Herres, CPA.
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Meet Julie Herres, CPA
Julie Herres is the founder and CEO of GreenOak Accounting, a firm that exclusively serves therapists, psychologists, and counselors in private practice across the United States. Over the years, Julie and her team have worked with hundreds of private practice owners and developed serious knowledge about what makes a practice financially successful.
GreenOak’s goal is to help practice owners feel comfortable with the financial side of their businesses and have profitable practices. Some of the firm’s biggest success stories were achieved through implementing Profit First. Julie is an accountant and an enrolled agent (EA). She is also a speaker, author of Profit First for Therapists and the host of the Therapy for Your Money podcast.
Freebie: Visit profitfirstfortherapists.com/joe for a free workbook on How to Get Started with Profit First for Therapists!
In this Podcast
- Unhelpful money mindsets to shake
- Julie’s tips for solo practice owners
- What is Profit First?
- Julie’s tips for group practice owners
- Julie’s advice to private practitioners
Unhelpful money mindsets to shake
Most therapists recoil at the topic of money, and especially the topic of being profitable or financially successful.
There’s a whole lot of guilt and shame that comes with the money side of being a business owner, often [for] therapists in private practice. It’s really interesting to me because that’s not the case when we look at restaurant owners, or construction businesses … There’s not this baggage that comes around money. (Julie Herres)
So many private practice owners get into therapy because they want to help the people in their communities, and aren’t after the money. However, because they end up running a business that helps people, the business needs to be profitable in order for them to keep doing their passion, which is serving the community.
I would love to see therapists, counselors, and clinicians step into; “I deserve to make a good living too”, because that helps more clinicians come into the industry, it helps to support the mental health needs that are ever-growing, and I think it’s good for society in general. (Julie Herres)
Julie’s tips for solo practice owners
If you are a solo practitioner, one important piece of advice that Julie gives is to save for taxes, because that is one of the number one things that can bring a solo practice to its knees very quickly. Make sure to chat with your accountant at least once a year to make sure that you are on the right track with saving for your taxes.
What is Profit First?
Profit First is a cash flow management system. It is a way to manage your money that makes it very simple for business owners to see what is going on in the business, to know exactly how much money you have to spend within each category of your business. (Julie Herres)
The Profit First system turns the typical accounting equation upside down: income – profit = expenses. With this system, you carve out profit from the very beginning to make sure that the business – and you – can keep running. When you are forced to spend less, you get more creative about how to spend the money that is there.
When all of your money is in one account, it’s like one big plate of food. It’s there when you are looking at your bank account to make a financial decision, you’re thinking; “Oh, look at that, there’s plenty of money in this bank account!” … But what it doesn’t take into account is that you [might] have a tax payment, payrolls due next month … It doesn’t give you all of the context of that pile of cash. (Julie Herres)
So, split things into smaller groups, and separate bank accounts:
- For income
- Operating expenses
- Payroll account
- Tax account
- Owners pay
- Profit account
[The profit account] is rewarding you for the risk that you take by being a business owner by giving you … something to take home and do something fun with. (Julie Herres)
Julie’s tips for group practice owners
It may sound strange but don’t overpay your employees. You can find a good pay split with them that doesn’t leave you without any profit or your business without extra funds to run, while still giving them a good salary.
When you bring someone on into your practice, Julie also recommends paying them 45 – 60% of the revenue that they generate. It can be done, and it’s possible, and it should be done because it becomes more sustainable.
Julie’s advice to private practitioners
Every practice deserves to be profitable, and every practice owner deserves to make the money that they need to enjoy their lives.
Sponsors Mentioned in this episode:
- Trust me, don’t waste any more of your time, and try TherapyNotes.
- Text #40 to 231 422 0677 to get your 40 Days to Full-text series!
Books mentioned in this episode:
Useful links mentioned in this episode:
- Visit Profit First for Therapists and listen to the podcast!
- Text #40 to 231 422 0677 to receive our “40 Days to Full” text series!
- Check out Podcast Launch School!
- Visit Joe’s website
- Find out more about Listen Notes
Check out these additional resources:
Apply to work with us — a decision-making matrix for your next steps
Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners who are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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