Why The 30K/Mo Practice is So Important
Having the luxury of speaking with and coaching many evidence-informed chiropractors of all levels has provided me with some great insights into the struggles and opportunities of the patient-centered chiropractor.
I have realized that the 30k/Month average collections is a vital goal to reach as a practice. As a patient-centered chiropractor, I know you aren’t trying to make this all about finances, but let me explain why this is so important and why we are having coaching calls with our members on this topic.
A practice that can have adequate revenues and profits will be able to:
Provide an excellent patient experience.
You, the doctor, won’t be stressing about finances and can be fully engaged with your patients.
You can afford to hire an “A Team”.
Better Equipment.
Better Space.
Prevent burnout because you have a team helping you.
Better services.
You can soon hire an associate to free you up even more.
You can start only to do things in your Unique Ability.
Let’s do a 30-thousand-foot overview of the finances of this level of practice. The 30k isn’t an exact number, but you get the point. It could be 28k in Nebraska and maybe 35-40k in San Francisco. But I have seen the 30k number be on point in most scenarios.
I want to take two financial frameworks discussed on our podcasts and virtual summits before—the Profit First Model by Michael Michalowicz and Simple Numbers 2.0 by Greg Crabtree.
I recommend two podcast episodes for you to gain more clarity.
Let’s first dive into paying yourself well and being profitable. Below are The Profit First Target Allocation Percentages (TAPS). The 30k/Month practice is about 360k per year and falls under Category B.
The 35% of Owners Pay in the 30k/month scenarios will give you about 10k/month in income, not counting your 10% profits. For the sake of this scenario, let’s place your payroll taxes for YOUR W2 pay within the 35% owners comp (You will want to seek professional guidance on all things taxes, and I recommend Holly Tucker for Profit First for Chiropractors). The 10% Profit will be about 3k per month.
That now leaves about 17k for Taxes and Operating Expenses.
Let’s remove the Taxes (15% of 30k = 4500). It could be more like 10% for taxes, but more below.
That leaves 12,500 for Operating Expenses.
Now let’s discuss the Ideal Core Team, in my opinion. Adding to this Core Team will be the next goal when you consistently hit the 30k/Month averages.
The Doctor Owner
Rock Star Front Desk
Swiss Army Knife Chiropractic/Rehab Assistant or Fully Involved Preceptorship Program
Let’s now transition to Greg Crabtree’s 2.0 Concept, which they have researched heavily amongst thousands of small businesses. The main concept is that your Overall Labor Costs (including payroll, payroll taxes, employee benefits, and 1099s that service your business) should be half of your total revenue. Divide 360k by your Overall Labor Costs, which should be 2.0 (or 1.9-2.1).
So, in the 360k Practice, your Overall Labor Costs should be about 170-190k per year or 14k-16k per month.
If you are taking 10k of that, that leaves you 6k for more labor costs. It also leaves about 6500 for other expenses such as rent, utilities, marketing, medical and office supplies, etc.
6k for the cost of a front desk and CA could be a tight squeeze depending on your location, but you could consider a few ways to make it happen.
A well-developed preceptorship program could replace the CA position
You could choose to pay yourself a 1-2k per month less to afford both the front desk and CA for a bit, and then that CA will allow you to make a bit more once fully onboarded, then pay yourself the full 35%.
You could opt for a part-time CA or one that only works your patient-facing hours.
Maybe your accountant or profit first specialist determines you need only 10% of revenue tucked away for profits, not 15%. That % could go toward your Operating Expenses and your CA potentially.
Knowing your numbers, making accurate growth decisions, and setting realistic goals get you from being a lone wolf to having a team-based practice. It isn’t easy and doesn’t happen overnight, but it can surely happen.
But when you get there, you have a practice with a great team, healthy profits to grow with, a wonderful patient experience, and you can avoid burnout. This great team and healthy profits will launch you into the next phases of growth that may include hiring an associate, adding big-ticket services such as Shockwave, buying or leasing a bigger office space, and much more.
There are many variables to tease out for your practice and, more importantly, how to get there. We are doing that with our coaching clients in June and moving forward. This will break the vicious cycle of the busy and broke evidence-informed chiropractor.
Some of the variables and strategies we are helping our clients with:
What numbers do you need to see (OVA, NPs, Office Visits, etc)
Who do you hire first and when?
3 year vision strategy
Patient Adherence
Marketing Strategy
Leadership Development
The Patient Experience
Much More!
Suppose you are above 30k per month, like many of our clients, even better. The principles around this scale allow you to hit the next growth phase and hire associates. We help you with that too.
If you’d like to learn more about our coaching program and have a free consultation call with me, watch the short video on this page and fill out the contact submission form. I will personally email you back.