I hear it a lot. How do I balance the income and investments within my group practice? How do I know how much to pay myself and how much to keep in the bank? As private practitioners grow into group practice owners, they realize that not only do they have to take care of themselves, they have to take care of their staff. Part of that means making sure that they are fiscally responsible with their business.
It is important to have a clear idea about where your money is invested, how much you need to save, and how much to pay yourself as a clinician and business owner.
- How you decide on your business’ finances depends upon your goals, current and future. My most important tip is that you have a good accountant. I also recently invested in an AMAZING financial planner, who went through everything with me re: money. Having a professional who knows their stuff can be the difference between feeling secure about your business’ finances and feeling overwhelmed and uncertain.
- Another tip is to set aside, at minimum, three months worth of your business expenses, in case of emergency. So, if you invest $4000 a month towards rent, EHR, billing, marketing, etc, then have $12,000 saved up.
- Look at your investments. What are you putting your money towards? If you see some items that you don’t view as investments in your business, it may be time to let it go. Things like rent, marketing materials, EHR system, phone lines, accounting, and the occasional Starbucks and lunch for my staff are all investments toward my business growth and overall wellness. If there is anything you are putting money towards that doesn’t feel like it helps in the growth of your business, change it!
- If you see yourself expanding in the future, start planning for it now (financially speaking). Being able to have money set aside for expansion helps allow you to continue paying yourself throughout an expansion.
- How are you paying yourself? It depends on your business structure. There are so many ways to pay yourself, and this is a question that many business owners have-Am I paying myself right? Talking to an accountant and financial planner helps tremendously in this way. They can help you structure how you pay yourself, from paychecks to distribution. Don’t feel in the dark and uncertain about how you pay yourself. It is important that you have the financial benefit of owning a group practice, so maximizing your income and doing so in a safe and responsible way can help you feel confident in how you are managing your finances within your business and personal accounts.
Whether you are first starting off or well into group practice ownership, it is never too late to prioritize and take time on this. What once worked for you may not work for you now. Business income may go up and down throughout the years, but being financially responsible and confident are a constant in business ownership.
Maureen Werrbach is a psychotherapist, group practice owner and group practice coach. Learn more about her coaching services here: LEARN MORE HERE