Like all businesses, running a chiropractic clinic requires a coherent strategy and framework. It involves a lot of foresight and planning and having a very clear vision of your ideal clinic. And while the chances of building a successful chiropractic practice are extremely high if you have the passion and dedication, there is one factor that is often overlooked and yet imperative to building and sustaining a lucrative and successful chiropractic clinic.
That essential element is Discipline.
There are many pitfalls that can slowly sink your ship over time; common mistakes and temptations – I’ve done them, I’ve seen them and I still see them all the time. However, one of the most common mistakes that chiropractors make that leads to stress and business failure is lack of discipline in their spending and saving.
Don’t Overspend
Many chiropractors have an ‘overspending’ problem. For some, every dime they bring in, they blow it and never save any money for ongoing expenses. They’re never saving back to build what I call a ‘security base’ that will help ensure the longevity of the clinic over time.
He or she will get a check in for $3000 and he’s off on a vacation. If a new table comes out that he just loves and it costs $8500, he will tell the office manager to write a check for it. He is not considering how much is coming in verses how much is going out. It’s just a ‘no planning’ approach for all practical purposes.
The reality is that you have needs and you have wants and you only need your needs. The wants are great but should only be considered when you have money to spare above and beyond your ‘security base’ which should be at least four months worth of expenses for the established practice.
If you are opening a new practice, do not think that whatever cash you have, that you can or should spend most of it to get your place operational. It doesn’t make any sense. Just get the basics, which are very few in chiropractic, and ensure the office has a very clean and professional look and that is all you need to start out.
If you’ve got $100,000, spend $20,000 to get the doors open. You now have $80,000 left to cover your rent at $4,000 a month and you need $3,000 a month to live on; that gives you about 12 months of expenses without bringing in a dime. That is a working capital plan. I realize I gave you a very simplistic version, but the point is that without a plan you’ll never be able to handle unexpected expenses that pop-up and that can be a very deadly mistake.
Plan for Problems
I always have a backup plan. One rule of thumb – though it’s hard to do this when you are starting out – is banks will always loan you money when you don’t need it. So when I have clinics that are doing really well with a lot of reserves and a lot of cash flow, I get a line of credit. I do it all the time. I have lines of credit on all my clinics – I hardly ever touch them! As a matter of fact, I haven’t touched a line of credit for a clinic in 4 years. I haven’t needed to because of how diligent I am in the rest of my cash management planning. But I have it as an emergency plan; it’s there in case I need it.
Say that nothing comes in for a few months. All of a sudden, you go from a clinic that’s making 50 grand a month with overhead of 35 grand a month to a clinic that is making 10 grand a month and you’re still spending 35 grand a month. Where’s that loss coming from? That comes from your base that you save back as part of your emergency or backup plan.
The bottom line here is that as the money starts coming in, it doesn’t mean it’ll be coming in at the same rate forever. You’ve got to plan for bad months. Expect that your worst months will be your average months. If you do this, you’ll be giving yourself more bonuses down the road because you’ll end up having surpluses of cash. It’s just a smart way to manage your money.
Owning a chiropractic business can be a very rewarding and lucrative experience. However, if you are not well disciplined in your spending and saving habits, then you could easily fall into one of these common money mismanagement mindsets which can create a lot of unnecessary stress and ultimately lead to the downfall of your practice.
