Should I Share Practice Finances With My Team?

We break down how to bring your clinicians into the business story with real numbers while still keeping healthy boundaries around what stays private. We use a purpose-first approach and share the specific percentages and performance metrics that build trust, improve retention, and spark better teamwork.

• Setting a clear purpose for sharing numbers with the team
• Using percentages to explain profit, payroll, and operating expenses
• Avoiding revenue anchoring that can trigger pay resentment
• Framing profit in terms of stability, reinvestment, and benefits
• Sharing savings as months of coverage for reassurance
• Tracking leads, referral sources, and conversion rates to improve growth
• Using average session fee, caseload, and length of care for coaching

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

Transcript

Transparency Without Oversharing

SPEAKER_00 0:00

I think as practice owners, we want to be transparent with our team. We want to feel like there's no secrets that we're kind of all in this together. And so when it comes to sharing the numbers in our business, we can sometimes wonder how much is too much to share? How much should we let them see behind the curtain? And then how much is it okay to maybe keep in the unknown circle? Well, today I'm going to break that down how you can provide some clarity and some openness to your team with your numbers without oversharing. My name is Craig, and I'm the owner of DAC 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. I think more and more we are finding how important it is to really connect the team and let them feel a part of the bigger picture. I think that's becoming something that people are really seeking is having a really deep purpose in the company. And so as therapists and physical therapists are out there looking for a place to work, yes, they want to get paid and paid well, but also at the same time, they want to, I think, feel like they are a part of it and that the outreach as you grow and reach more people, that it's not just about the patients and clients they're seeing, but that they have a hand in the overall reach and impact that you're making on your community. So when it comes to that, sometimes including them in on the how the business is doing and what the numbers are and the metrics can really help bring them into that. It can also help them feel anchored into the business. Maybe if there's a lot of unknowns out there in the world, in the economy, in the political climate, knowing how the business is doing can sometimes offer that reassurance. Whereas if they don't have any clue, then maybe they're seeing what's happening out there and they're starting to be concerned of, well, if it's impacting people and businesses, what about my job? Is that going to be impacted? And a lot of times that can lead to them even moving forward to step out. And so here I'm going to talk through some ways that I I'm going to go through some numbers that I share with my team, some things we've recommended with our clients. I helped a client just uh last month prepare some numbers to share on their their team meeting to give their clinicians a view of how the business was doing. Now, what's really important is before you even consider this, is I want you to think about the purpose. Why are you sharing these numbers? What do you want the team to take away from it? Is it reassurance? Are you wanting to do use it for maybe retention purposes, showing them here's how much we're making and here's how much we're reinvesting in the team? Uh, do you feel like there is a resentment growing on maybe pay satisfaction and feeling like we need to show them, you know, we are paying them as much as we can, or just highlighting just how much they're getting paid? Do you want to use it to celebrate as a team? Again, bringing them into that bigger picture of look at how we have improved profitability, how much we have built our savings, whatever that is. What do you want to focus on? What do you hope that they take away? This is the lens that we want to go through so that we don't overshare. If your goal is reassurance, then you probably don't want to be going into the details of you know the amount of debt that your practice has at this time. Maybe you do if you really just want to provide that clarity, or maybe you're celebrating that we have paid off this much debt in the practice in the past year. So two different goals can really bring that in. If you are dealing with resentment from the team on pay satisfaction, then turning around and saying, you know, here's how much profit we took, and here's how much I'm getting paid from the business can sometimes work in the opposite direction, just depending on the numbers. So figuring out what you hope to provide, what you hope they take away from it. What is your focus? And then what do you want to improve on in the practice is another lens to look at this. Maybe you don't feel like there's an issue. You don't, you're not saying, okay, people are resentful right now, or we're dealing with retention issues. Maybe just stop and say, what do I want to improve? Uh, maybe the close rate in your sales process, maybe um client retention or patient retention. How can we keep people coming back? Maybe cancellations, whatever that is. If you have something that you're really wanting to hone in and focus on, then this can be super helpful. We did this last year when we were looking at our sales process and our close rate. So when I went into share numbers with my team, that was something that was big. I wanted to go through, you know, how many consultations are we booking, how many of those are turning into clients, what is our percentage? Uh, and then driving some conversation from that. You letting those numbers create some collaboration, conversation on what maybe do we want to work on? Do we need to tweak anything? Are you guys seeing a trend or a noticing and just using that as an opportunity to bring them in on the conversation that they have a say, and from there we are able to improve our sales process and our close rate. So, my first tip, I'm gonna start with the finances because I think that's a big piece, and then I'm gonna go into some other numbers that you might want to share that a lot of people do share in their team meetings. But let's start with the finances. First of all, I highly recommend you only speak in percentages. So not going into the details of how much dollar amount you spent in each specific area, how much how much money you actually set aside in profit. And a huge reason is is because for depending on the practice size, and as you get bigger, let's say you're a million-dollar a year practice, your therapists working for you, they're anchoring to their own income, if that makes sense. So a million dollars, when you when you say, Hey, this year we brought in$1.1 million. For a lot of people, that's going to just seem outrageous. They're gonna go, oh my, like, that is so much money. And then a lot of times they're gonna anchor to, but why am I only getting paid? I'm only getting paid this. Um, this can lead to them maybe exploring opening their own practice, like, oh, maybe if I go do that myself, I can start making a million dollars. Um, so it's not bad necessarily to be that transparent. I just recommend just speaking in terms of percentages. Um, if you want to share a dollar amount, revenue is where I would start. And then going into the percentages, it's like we've brought in a million, however, you know, this is the percentage of it that went to payroll. This is the percentage of it that went to uh our office space and um marketing and et cetera, et cetera, so that we can start to see here's how much is actually left after we do all those things. So speaking of percentages is huge. I personally just say you don't need to share the revenue side. You don't need to say, here's how much we earned this year. It's just come in with all right, here's what I'm gonna break down. I'm gonna start with profit percentage. Um, this past year we had a X percentage in profit, um, which is up from the previous year. Um, I also like to give context. Here's why profit matters to you, and here's uh maybe even here's what we're utilizing that profit for. We used a good portion of it to build up our emergency savings so that we have a cash reserve, so that if something happens, we can still have cash on hand to cover payroll for X number of months, so that your jobs are secure if there is a downturn in business. Um, so our profit percentage, uh going into the why, what that means for the practice, what you intend to do with that, um, if it's relevant. Okay, then payroll percentages, operating expenses, uh, what percentage is going to those two key elements? Um, I think this is really helpful for people to know. Again, if you are concerned about your therapists or physical therapists going and starting their own practice, some some practice owners love that. They want to nurture that entrepreneurial spirit, they want to encourage and support it. Some it it really is a point of anxiety of what if they leave um and then now I gotta go hire somebody. And if you're in the mental health space, what if they take all their clients? And so now we've not only did I lose an employee, but I just lost this whole book of um income. And so there's a lot of anxiety around that. Uh, probably for a different episode, why I don't think that should be something that is just causing fear and driving decisions. I don't think it should be. I think you just do what you can. Um, again, I'm not gonna dig into that now. Maybe that's a future episode idea, but for for our purposes, sharing the overhead expenses can give them some insight into again, what does it cost to run a business? They hear a million-dollar practice, or they think, okay, they've got five clinicians and I'm bringing in this much, so the five times that, or I'm making X per session, and I'm that's how much they're paying the client's paying or the patient's paying, and I'm only keeping this much. So when they start thinking that way, it can be very tempting to be like, well, I'm gonna go start my own thing, so I can instead of making sixty dollars, I'm making a hundred and fifty dollars every time I work with a client. So by going through and kind of saying, you know, for every time somebody pays us a hundred bucks, sixty percent of that goes out to payroll. And then twenty percent of that goes out to our overhead expenses, and so they can start to be like, okay, wow, that's that's way more than you know, I was thinking, I'm not gonna be making as much. So this is key. Now, again, this boils down to your purpose. Are you trying to showcase these things so that they can understand the inner workings of the business? Uh, maybe you're trying to showcase, hey, we've been working hard to lower our operating expenses so that in turn we can increase employee pay or benefits or different things. So over the last year we dropped our operating expenses by X percent. So, really going back to that purpose can really dictate why and what you're sharing. Um, even on these little areas like operating expenses, how much have we brought it down versus how much are we actually spending on it so that you know? Next one could be just employees going to the pay satisfaction side. Uh, how much are we spending on our employees? What in going through all the different things payroll, bonuses, continuing education, PTO, adding up that amount, and then coming back again at a percentage from our business? This percent was reinvested in our team. This is how much we reinvested in you. Um this can again bring that team together, it's really valuable. Marketing percentages, how much did you spend on marketing? This is directly related to your team as well, especially if they're paid on a per session basis. So the amount of money you're investing in bringing more clients and patients in, the more money they're making. Um, are you actively working on improving one of these areas? So, again, talking about that. Um, and then going back to that improved profits, I'm all about what does that mean to them? So, yes, we want this collective, this collective mindset where they all care about the business and they want the business to thrive, but also at the same time, what is it, what's in it for them? So by having more profit, here's what we plan to do for you, or this is how we can afford to do X, Y, and Z. If you do a profit sharing system with your team, then obviously the more profit you have, the more beneficial it is to them. So you dropping operating expenses and you pulling back spending and increasing profit directly relates to them because that just means that at the end of the quarter or whenever you do your bonuses, their bonus is going to be bigger. So all of that is really helpful to know. The next number thing is how much money do you have in savings? Now, again, not necessarily a dollar amount, but how many months of savings do you have? Now, when I say months of savings, go and before the meeting, prep this number, look and say, okay, you know, what is our monthly overhead cost to cover our payroll, to cover our team? Uh, how much money do we have set aside to make sure that we can continue to do that? Um, usually the way I think about it is um let's whatever your total monthly overhead cost is, maybe cut that in half, and then we'll say, so let's say your total overhead cost every month is$10,000. So what I'm gonna say is for every$5,000 I have in savings, that is a month. The reason I cut it in half is because the odds of all of your revenue completely stopping is pretty minimal. Now, here we are post-pandemic, and I know obviously things like that can happen. So that's why we're gonna want to aim for more months. Uh, but that's a good kind of rule of thumb in my head is okay, if we were to have an industry downturn, if all of a sudden leads just dropped or uh one of our insurance providers we just got rid of completely, and so now the number of clients we're getting is gonna drop, then that's not all of our revenue. So it's not like we're all of a sudden making zero dollars and we need, you know, ten thousand a month to pay our expenses. So cutting it in half is a good rule of thumb. You decide what your comfort is. I still think when I say that's why I always say three to six months. Uh, if you're gonna cut it in half, then let's just say six months. So um, over six months, that's$30,000 is what we would need in savings for you to say confidently say we have six months of savings. Uh, if you think you need that$10,000, if that's better for you, you're like, no, I want to have enough to cover all of our expenses every month, then that's three months that you have right there with that$30,000. So uh having$30,000 to$60,000 in savings for somebody who's got$10,000 a month in expenses, that's probably a reasonable amount. And that's what you can speak to. Again, you don't need to come in and say we got 60 grand in the account. It's just we have six months of overhead costs saved. And here's what that means. And again, going back through, if this were to happen or X, Y, or Z were to happen, you won't be affected immediately. We have enough money to weather that storm after X number of months is when we would probably need to start thinking of some ways to cut. But for the most part, we can continue business as usual. The other thing that's helpful, and this is just more on the internal side, not necessarily sharing, but about having that savings. If you don't already, is if you're dealing with insurance, if you're dealing with um any of those things where there could be cash flow strains or struggles, having cash to tap into if an emergency strikes is so, so important. Uh, and even on the internal side, again, your team may never know what's happening, and you may be using that safety net if an insurance provider takes months, like they're the you get backlogged on those reimbursements, and you're just waiting on that large check to come in for months' worth of sessions. That's where this cash reserve can come in to save you. But for your team, all we need to do is share how many months of savings do you have? Okay, outside of the finances, some other numbers I'm gonna just kind of work through with you quickly is marketing and sales. This is kind of the example I gave that I did with my team is how many leads are coming in? Uh what are those main lead sources? Where are these leads coming from? Is it uh Google search? Is it psychology today? Is it uh a doctor or uh a hospital that's sending them to your physical therapy practice for rehabilitation? Is it a specific person? Is it another PT or another therapist who specializes in something different? Uh is it social media advertising? Is it insurance provider? What where are they coming from? That's really valuable for you to know, and you can share this too. So, hey, here are our top three referral sources, and here's what we're gonna be doing with that. We're getting most of our clients from uh our doctor partnerships. So, what we're gonna do is we're going to take them lunch once a quarter to just nurture that relationship. Going through those main lead sources, or we're gonna re-in-add more dollar spend to our Google ads because that's what's driving the most leads. Looking at your number of leads, who's providing the most leads, and then conversion rates. How are we doing converting those leads? Um, this could be for your sales team. Again, this may not even be maybe your therapists aren't even doing that. So just showing them is is completely fine. Just say, here's just the inner workings of this, here's how we're doing, here's what we're trying to actively work on to improve, or uh, let's celebrate how great our close rate is right now. We can look at our average session fee as a company. So, what are we collecting on average per session? Again, depending on your purpose, this may or may not be relevant, but how much across the board, especially if you're dealing with insurance, all the reimbursements are different. So, on average, we're collecting X dollars per session, just letting them kind of anchor into that. The average caseload, the average therapist on our team is seeing this many people per week. Um, if you're in the physical therapy space, let's look at maybe the average lifetime I'm gonna say value, but how long does a patient on average stay with us? Uh physical therapists deal with a much shorter lifetime than your mental health therapists or anybody else really in the uh in the health care field, because usually it's rehabilitation. I know there's a lot of different things you can offer, different services, but for the most part, your average PT is doing rehabilitation. And so usually that's a what four to eight week timeline, uh, depending on what they're working on. Versus a mental health therapist may have the same client for years. So going through that data, and I think this is great for the mental health therapist too. How long does a patient usually on average stay with our team? If you want to sit down individually with team members and go through some of these numbers, uh, here is some you sit down with one of your team members. Here's your average session fee, here's your average caseload, here's kind of what we are ho the company average and how you compare to it. And so, how can we work on increasing your average session fee? Or are you looking to take on more clients or we want you to take on more clients? Whatever that conversation is, this information can be really helpful. And nowhere in here are we talking about how much you are making, how much profit you're putting in your pocket. It's all about them as a company, bringing them into it. How is it relevant to them individually? How are they going to see some positive results from this? And then, or the inter or the the inverse of that is how can we use this to maybe fix some problems, whether it's with an individual who needs to up their game, or as a company, how can we improve in these core key areas? So I recommend maybe just starting with something simple. So again, go back to your purpose, why and what do I want to share, what do I want them to take away from it, and then just pick a few things that you want to share with your team on the next team meeting, give it a shot, let me know how it goes. Thanks for joining us on the Therapy Business Podcast. Be sure to subscribe, leave a review, and share it with a practice member that you may know. If your practice needs help getting organized with your finances or just growing your practice, head to therapybusinesspod.com to learn how we can help you.