The Therapy Business Podcast

The 3 Critical Secrets to Financial Clarity in Your Therapy Practice

• Craig Dacy • Episode 55

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Financial frustration doesn't have to be the norm for therapy practice owners—there are three critical secrets to achieving peace of mind and taking control of your business finances.

• Understanding exactly where your money is going through a detailed financial snapshot
• Setting clear financial goals and making incremental changes over 12-18 months
• Implementing a cash management system like Profit First to simplify accounting
• Paying yourself regular, consistent paychecks instead of taking money sporadically
• Creating quarterly profit bonuses as a reward for business ownership
• Building cash reserves to eliminate feast-or-famine cycles
• Transitioning from working in your business to working on your business
• Designing your practice to support your ideal lifestyle, not just cover basic expenses



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*Intro/outro song credit:
King Around Here by Alex Grohl

Speaker 1:

When I meet business owners, they are frustrated with the finances, to say the least. There's a lot of things that can cause us to feel stuck or that there's no traction. Well, today I'm going to be walking you through three secrets to financial peace of mind. We're going to talk about three common areas that are a pain point for business owners, just like you, and ways that I help them get past that and show them how to overcome that to reach a place of financial peace of mind. My name is Craig and I'm the owner of Daisy Financial Coaching. Our team is on a mission to make your therapy practice permanently profitable. If you own a solo or group practice, we're here to help you build a business that creates more time, makes more money and serves more people. This is the Therapy Business Podcast. This is a big video today because I'm going to be doing a deep dive into the most common pain points business owners have, which I can almost guarantee one of them will resonate with you and not only that, but how to overcome them. Exactly what I do to show business owners have which I can almost guarantee one of them will resonate with you and not only that, but how to overcome them. Exactly what I do to show business owners how to fix this problem, so that they have clarity, so that they have peace, they know what's going on with the money they're paying themselves more. There's just so many benefits to this, and not only that your business grows and you can serve people better.

Speaker 1:

So let's dig into the three things, and I'm going to start here with number one. The first flat, and how are we going to fix this? Business owners have no idea where the money's going in their business. This is one of the most common problems. Common complaints is I don't know what's going off my money. Sometimes I'll even meet with a business owner for the very first time and we start looking at their finances, or I'll ask them questions about how much they spent or how much did you take home last year, and no idea, no clue. I don't know what it was. All I know is there's not anything in the bank or I'm not getting paid where I want to get paid. So what do we do? What's the fix to this and what does the end result look like after I walk a client through a process? Well, they have clarity and control of all cash that's in the business, if a dollar comes into that business, they know exactly what's going to happen to it, where it's going, and if there is a deficit somewhere, they know why, they know where and we know how to problem solve that. So how do we get to that point? How do we go from no idea to clarity and control? Well, there's three large pieces to this. I'll move my face out of the way.

Speaker 1:

Number one we need to have a financial snapshot. We need to know where you currently stand in this whole process. What is going on with your money today? How much are you spending on expenses? How much are you paying yourself? How much are you setting aside for taxes? Or what is your profit? If anything, what's your payroll?

Speaker 1:

We want to take a look and get an idea of this snapshot. This is what I do with a client. When they first come on board. We sign up before our first meeting. They give me a glimpse into some of their finances and I do all the number crunching for them. They don't have to do anything. They just hand me maybe their profit and loss statement or cash flow statements, whatever they have, and I dig into it and I come to them with a report and say here is where you are today. You're spending 70% on operating expenses. You're spending, you're setting aside nothing for taxes, right? So on and so on. And once we have an idea of where you are today, then we can set a goal for where you need to be.

Speaker 1:

And that's the second piece how do we have clarity in our money? Is we need to know what clarity looks like. What does that end goal, what does a healthy business look like? That's another thing I do. So we know where you're starting. We need to know where you need to be financially. That's another thing I do. So we know where you're starting. We need to know where you need to be financially.

Speaker 1:

And so, with that snapshot, here you are. Today. You're spending 70% on operating expenses, and what I recommend for your business is 30% or 40% or whatever. And so we're going to get you to that end goal. We're going to help you reduce those expenses. And I see you're only paying yourself 20%, but you want to be paying yourself more, so we're going to move you up to 50% or whatever it is. We want to know what that end goal is. So your starting point and your end point. And again, when I sit with a client for the first time this is our first meeting they're getting. Here's where you are today, here's where I'm going to take you or I'm going to help you get to.

Speaker 1:

And then the third piece is the work we do together and they're pretty intensively for the first six months or so is putting that game plan into action. We want to put it into work. What that looks like is slow and incremental changes. So here you're, at 70%. Let's set a target for maybe getting your operating expenses down to 67% by the end of the. A couple percentage points each month, start slowly bringing it down, or every quarter bringing it down, so that over 12 to 18 months. At that point you're at that end goal. And much like losing weight, we don't want to lose 30 pounds overnight. We want it to be a healthy change and a sustainable change. So I don't want somebody jumping in and cutting their operating expenses by 30% and expecting it to be okay. Usually, usually it's not. So we want that slow, incremental change and that's how we implement it and that's how we get you to that clarity and peace of mind.

Speaker 1:

All right, the second flat, the second problem that most business owners have that I help them with is not paying yourself what you're worth, why'd you get into business man If you're not paying yourself what you're worth? Why'd you get into business man if you're not paying yourself? Right? I say that jokingly, but it's also true that we get into business. We quit our nine to fives, we quit our day job. We did whatever to work for ourselves for a reason, and, yes, we would do it to serve people and we do it to help others make more money or solve a problem. And we do it to serve people and we do it to help others make more money or solve a problem. We do it to make an impact on our community or on the world. But you could do that working for someone else. You could go find an established company and go work for them and make the same impact, or at least a similar impact, right?

Speaker 1:

No, the reason we go into business for ourselves is for selfish reasons, and that's okay. Let me say that upfront. I that is 100% okay. In fact, I want us to recognize that, that it's okay to have selfish things and want to make more money or want to have more freedom of time, cause that's truthfully, why we work for ourselves. There's a lot of reasons and I want you to maybe reflect on that.

Speaker 1:

Why did I go into business for myself versus for another company? And then, am I paying myself what I'm worth? Am I working 80 hours a week for scraps? Would I be making more if I went and worked for someone else? Am I paying myself like the CEO or the most important employee in the company? Because that's what you are, and if you're not, we need to fix that. And let me tell you, most business owners are not. Most of them are not paying what they're worth. Even some of them I'd say most of them don't feel satisfied with their pay. They feel like they want to make more. Some of them will come and be like I feel like I'm making, I'm doing okay, but I'm like you can be paying yourself more if you really want it, and, of course, no one turns that down right. So we want to take you from not paying yourself what you're worth to paying yourself more money more consistently.

Speaker 1:

That's the other piece. We want it to be on a consistent basis where you can count on it month to month. So how do I do that? How do I help my clients get to this point? Well, number one is we need a cash system. We need a system in place to watch, monitor and really be purposeful with those dollars.

Speaker 1:

I always say I want you to be proactive, not reactive when it comes to your money, and so the system I recommend and that I help my clients implement is profit first. This is taking the complexity of accounting and bookkeeping and making it as simple and understandable as possible. Former fourth grade teacher here I like simplicity, so that's what I want, and simple is what we use. If it's too complicated, we're going to ignore it. Hence accounting documents You're probably not looking at them and using them, but you're using your bank account and that's what Profit First leans into is your behavior. Looking at your phone, looking at your bank account to see how do I stand in operating expenses, in profit, fill in the blank. So we need that cash system. That's exactly what I deliver to my clients. I show them here's the accounts we need. I help them get them set up. I help them monitor, make the moves, take the money, put it into each account and then troubleshoot when problems arise, which no change is never easy. So those things are going to happen. We're going to hit those roadblocks.

Speaker 1:

Next thing that I prioritize is regular paychecks. Listen, if you worked for someone else, they wouldn't let you take whatever money you needed when bills were due, rents due or mortgage payments due. Oh, I'll pull a couple thousand out of the business account. Oh no, I got to go my daughter's ballet lessons. I got to pay for those. Let me go pull a couple hundred out of the. The company wouldn't let you do that. Right, you'd be fired.

Speaker 1:

If you're constantly pulling money out as you need it, we want you to be paid like a CEO. We want you to be paid as if you were. Pretend your company went out and hired you to manage it. If another company came to you and hired you, you would expect to be paid regularly, the same amount of money on a same rhythm. So that's what I want you to do to yourself and that's what I help my clients do. Is we pinpoint a what do you need to be taking home? And then B how much? What is that and how do we get you to what is? What percentage of your revenue would equal that? And we work it backwards, reverse engineer it. You need X dollars. Then you need to put X percent of your revenue into this account and start paying yourself. How often do you want to pay yourself? Weekly, biweekly, monthly, and let's get you set up on that rhythm.

Speaker 1:

And then finally, my favorite, the quarterly profit bonuses. You've invested everything into this business your time, your money, years of your life because, let's be honest, especially in the early days although I don't know that it ever truly gets easier you probably shed some years of your life into this business of just stress and sleepless nights or working really hard. You deserve to be compensated for owning the business. Your paycheck is your salary for running the business. Your quarterly profit bonus is literally a reward for owning a successful business, being the owner, and what I do is I help you implement, set it up.

Speaker 1:

So this is systematic. It's not a one-time thing, it's a habit. Every three months, cash is set aside in your bank account to be paid to you as a bonus, and this is not to be used on reinvesting in the business right, because we got to grow. No, this is not to be used on reinvesting in the business right, because we got to grow. No, this is to go on a vacation. This is to buy that big flat screen TV you've been wanting. This is to fill in the blank. This is to help you get out of debt. Whatever you are focused on doing, whatever you want to do, that's what I want that money to be utilized for. So this is how we solve that problem of feeling like you're not paid what you're worth regular paychecks, quarterly bonuses and, finally, the third piece.

Speaker 1:

The third thing that most business owners struggle with that I help them fix is their business feels like a J-O-B, just like what we were talking about. You leave a nine to five for that freedom, that time, that money. For that freedom, that time, that money. And yet we're stuck working for ourselves as the boss. There's no difference. We are just the boss who's working on us way too hard. So what I want you to realize and to accomplish, and in order to have financial peace of mind, your business needs to support your ideal work and life balance. It needs to have. You need to be balanced in what you want. How much time do you want to be working in the business? How many hours do you want to work? How much do you want to be paid? That's where we should be starting, and then again working backwards, reverse engineering this business to support that.

Speaker 1:

So how do we get there? Well, number one I help my clients build up a cash reserve. Using that profit first system, helping them watch that, helping them set goals, we build up some cash savings. This makes sure that you never get stuck in feast or famine. This means if the business is successful, then you're still getting paid consistently. If the business is struggling, you're still getting paid consistently the same amount because you have a safety net a cash safety net so that if you lose a big client, your paycheck doesn't take a hit. You have the money to help you move through that, to get through it. Until you fill in those roles, revenue peaks back up. It also means moving less in the business and more on the business, taking that ownership role, and this is what I help my clients do.

Speaker 1:

Once the cashflow system is in place, we start strategizing their business, whether it's hiring, whether it's scaling, whether it's looking at their products, whether it's looking at their day-to-day tasks. How do we get you to be more of an owner versus somebody who's doing all the work inside the business? We want it to be where, if you were to take a four-week vacation, you would come back and the business made more money than it did before you left, right. So that's what I want to help my clients do and that's how we get that ideal work-life balance. And then finally, most importantly, your business should support your lifestyle.

Speaker 1:

I don't want this to be a what do I need to cover the bills? I want it to be how much do I need to make to achieve the ideal, perfect lifestyle? The one where I can travel and vacation as much as I want. The one where we can go out to eat as often as we want. The one where we can buy whatever we want or we can give however much we want. What does that ideal lifestyle look like? And then we're going to craft and create a business that supports that. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review and share it with a practice owner that you may know. If your practice needs help getting organized with its finances or just growing your practice, head to therapybusinesspodcom to learn how we can help.

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Craig Dacy

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