Do You REALLY Know Your Business?
*The following is an actual transcript for Do You REALLY Know Your Business?. We do our best to make sure the transcript is as accurate as possible, however, it may contain spelling or grammatical errors.*
Do You REALLY Know Your Business?
Hello everybody. This is Dr. Bob Hoffman from The Masters Circle Global. We regularly bring you these podcasts and these interviews of some of the most interesting iconic people in our profession that will dramatically change your life and your practice if you implement and execute. Today is no different. We have the privilege and the pleasure of speaking with Dr. Randi Ross, who heads up Premier Practice Consultants. You may or may not have ever heard of that company, but after this short interview, you are gonna absolutely be well aware of them and utilizing them. Randi, welcome onto today’s call.
Thank you, Bob. Always a pleasure to get a few minutes to chat with you.
Thank you. I feel the same way. Now, you and I know each other a really long time and I, I’m so honored to call you not only a colleague but a friend, but I’ve referred a lot of people to you. I will continue to refer a lot of people to you because every doctor watching this first needs to learn how to understand their financials to run their business better. They need to know what the value of their practice is today. They need to take steps to know how to increase the value of their practice. And if they’re thinking of selling in a year or five years, or 10 or 20, they need to take these steps today. Tell me why that is.
You know, I think because in the day-to-day operations of running a chiropractic practice, I mean, you, you have two jobs. You’re a chiropractor and you’re a business owner. So for a lot of people, you know the elements of the business owner, they kind of falls on others like an accountant or an advisor or even a coach like yourself. And they often, usually over time get in a little bit of a rut of not really knowing that they don’t understand a lot of the information, that when it does come time to sell you practice is critical to be able to explain. And so many people fall short. And then that’s either slows down the process or sometimes can eliminate a buyer. Cuz when we can’t explain the business, it’s a bit of a red flag. So a buyer might say, well, you know what? This is an unorganized business. Maybe I’ll move on to something that’s more efficiently run.
Yeah, I think that’s so profound for the people watching this. I want you to realize that when someone is uncertain, when there’s a crack in the confidence, that’s a huge problem. When it doesn’t matter if we’re talking to about a potential buyer or your patients or your staff, you always wanna make people feel safe and secure and comfortable to earn their trust. Once you’ve earned their trust and built a relationship and a rapport with them, most people will do what you ask then, and they’re interested and they want to move forward with you. So you’re a hundred percent right Randy, because most doctors in all fields of healing are terrible business people. Chiropractors are certainly no different. And they, they advocate their, their authority and knowing about their business. They just go to work every day and do the same thing. Today they did the yesterday and tomorrow they’re gonna do the same thing they did today.
And they’re just hoping against hope that over time the business is gonna grow. And there was a time that that was relatively common. It isn’t any longer. The fact is, if you want your business to be better, you have to think better and do better. And this is one of the reasons that I think people need to have their practice evaluated properly by a professional like you who do that all the time. There’s a, I believe you come up with three or four different models that of how the practice should be valued. Then you come up with the, the baseline or the most common number that it should be valued at. Even if you have no plan to sell for years, you should know in 2023, what is my practice valued at? Then if you’re not selling in the very near future, and perhaps even if you are selling in the very near future, you have to take specific strategic steps on how to grow the value of your practice so that when you are ready to sell, you’re selling it at the highest number, not a lower number.
So yes, knowing and understanding your business model, your financials critical. I couldn’t agree with you more, but also getting that valuation done now and learning what you need to do to improve it. And someday, and someday for some of the people watching this is this year and someday is in two or three years, or five or 10 years, someday when you want to sell it. Using Premier Practice consultants is the way to go. So you sell a lot of practices. Mm-hmm. <affirmative>, what are some of the, the problems or the points of friction or the pitfalls you commonly see?
So when we are, uh, either populating the valuation report or even afterwards, there’s a another layer of information gathering, as we would say. And more often than not, nobody really understands their financial documents. And for the most part, as you said, you know, you go through your practice and you’re making money and your accountant’s doing their thing and you I guess intellectually don’t feel the need to understand this information. But what’s interesting is when you either go to have a report done by us to value the, your business or you’re ready to sell, all of a sudden there’s a myriad of questions that you don’t have the answers to. And that should be a little troubling you, or at the very least, definitely encourage you to get those answers and to understand your business better. So, like Bob just said, even if you’re not planning on selling your practice now, getting that baseline valuation can really be critical to how your business proceeds in the future.
Because when, when all of a sudden someone like me is asking you questions and you go, I don’t know, I don’t know, and I’m looking at a profit and loss, which is really scary, Bob, cuz some people don’t even know that I didn’t have one. That’s right. Um, they tell me, my accountant said it’s in my tax returns and I’m like, no, it’s a, it’s a different document that a bank or a buyer wants to see. But anyway, I’ll start kind of line IDing it and, and asking them questions and nobody knows why. Cuz every accountant will kind of group your, uh, individual write-offs into whatever categories they are comfortable using. So two PNLs from two different accountants can have the basically the same financial data inside them. Nobody understands it and you don’t ask your accountant cuz quite frankly you don’t care. But what I’m telling you is when you really look at that and you have a really good handle on what those finances are, first of all it can do one or two things.
It can make you start looking at, am I really making as much money as I should be? Where am I spending money that maybe I shouldn’t be? Or where do I need to spend some money that I’m not? And one that happened recently, a doctor we were working with found an employee that was stealing from them and they didn’t figure that out until we started taking apart that profit and loss and that tax return. And all of a sudden they’re like, wait, where’s that $20,000? So these things happen frequently understanding this is so important and you know what, it doesn’t take a lot of time. If you take a profit and loss from one month or one quarter and look at it, for most people it’s between 20 and 30 items. Some of them are obvious like your rent or you know, or, or certain things like that.
Your salaries, excuse me, but just take it apart and understand one, once you understand one, then looking at them every month, it’s uh, you know, a habit Bob, like anything else. The same way your clients send you their stats every month so you can track how they’re doing. This is just another layer of understanding your business. If you get a p and l from your account and every month and you look at it and you really understand when it says insurance and there’s, you know, eight different insurances in there, you should know which ones are real business and which ones might be considered personal when you go to sell your business. The reason why that is so critical is because those are what we call backs. So at the end of your P&L it might look like you make $3,000, but when we go through it and you take out the things that are personal that you’re allowed to legally write off, it’s, you know, we’re not saying anybody’s doing anything wrong, but they’re, if I buy your practice, those are not gonna be expenses that I have.
Right? The real net is in 3000 it might be 700.
Correct. And we frequently see that. So you as a business owner, you have a product that at some point you’re going to sell. And understanding the financial workings of that product one is gonna make it easier to sell. Two, it makes you a better business owner. You really have your thumb on what’s going on in your business, how to make it better, how to just even provide better service because your business is gonna be able to function better. I mean, and a profit in loss is just one example. I will say eight to nine people out of 10 that I talk to when we get to a profit in loss have no clue other than the very obvious things that are in there. They have no clue what anything is. Yeah. And that’s, it’s just a not not a right way to run your business. And then when we get to the point that we’re selling, you are gonna need to explain your financials to me so that I can explain them to a potential
Plus it lowers the odds they’re gonna get an interested buyer. It lowers the amount that the practice is probably worth in the first place. Yeah. And it makes things more difficult in every dimension for you and for them. That’s the most important thing. Look, having a valuation of your practice today, even if you’re not planning to sell for 10 or 20 years, is really no different than a doctor doing a case study and having a baseline study of a new patient. You have to have a starting point. Now once you have that starting point, you could then put together a strategy on how to improve a patient’s health, or in this case how to improve the health of your business. Because not only do you want to net profit more money every year, but you want to get your practice to a point that you’re selling at a peak level, not at a low level.
And you want to be able to document that. And it should be easy. Randi, I’m sure when you ask doctors who are interested just asking for their financials, some of them could rather quickly turn it around to you, but most of them it takes weeks or months before they get it from their accountant. They find it in their file, they didn’t know, is this the right form? Is this the form you were asking me about? Look, those days have to be over. If we’re gonna elevate our image and our profession, we’ve got to take more control of our business and our practice. It, it isn’t rocket science, you said it yourself. It’s relatively simple and easy to learn. I go through this with almost all my clients so that they are proactive, not reactive, they are prepared, they understand their statistics, they understand their business model, they understand how to create valuation on their practice.
I refer many of them to you. I will con refer more and more to you. But for the people watching this, this may not be the sexiest conversation, especially if you’ve been in practice for five or 10 or 15 years and you’re not thinking about retirement or sale. But this is a critical conversation that you really have to use some, some emotion and some common sense because you have to get a valuation, you have to improve the value of your business. You have to learn about your business, and you have to learn what buttons to push in order to grow your business profitability and net worth instead of just hoping that tomorrow’s gonna be better than today.
And, and you know what also is so important, Bob, and I mean, I, when I, when I stand at, you know, your conferences, I talk to a lot of people about this and you know, we feel very strongly that every business should have evaluation. We have a program where we update it every year. We keep that file of important documents cuz here’s why. Sometimes the they won’t find them. You have, well it’s not only that, but sometimes the plan you have unfortunately is not, you know, what the universe delivers and very often someone gets transferred, I just had a doctor, we saw the practice cuz they’re married to someone in the military. They got transferred how to sell their practice. You know, sometimes unfortunately people get sick, people get hurt and even people pass away. So it’s also a just a preparation of your, of your business.
Whether it’s that you need to very try to quickly sell and then we’ve been following you for years and we have all your data and boom, you know, you’re up enlisted, you know, or unfortunately, if your significant other or family member has to do that, you want to be prepared. And if you don’t understand your financials, I could guarantee you nobody else does either, right? So sometimes the, you know, I say preparation meets opportunity and this is a very simple thing that we do. Um, you know, we hand you a worksheet with really explicit directions so that you, and then when we, we have a, a quick form that you just update every year. This is such a simple, very, very inexpensive process. We’re talking about a couple hundred dollars and it, it just, it mirrors being successful. It’s an element of being a successful business owner no matter what field you’re in. But especially for chiropractors. Because Bob and I talk about this frequently. We seem to have not gotten the memo on this stuff. And I like Bob would like to be part of our profession where we see that change.
Yeah, well said. Very well said. You know what, the doctors watching and listening to this, you have to have a team. And part of your team is a good accountant or a good financial planner. Part of that team should be premier practice consultants. Part of that team should be having a confidant or a mentor or a coach or a chief operating officer like myself to help drive your business and, and create that strategic plan for more profitability. Randi, before our time runs out, and again, thank you so much for your precious time and knowledge today. I hope everybody watching this contacts you. How would someone get in touch with you?
Um, they can simply go to our website, premierpracticeconsultants.com and they will see all the information about us. There’s forms on there you could quickly fill out to, uh, be able to have us meet. I will talk to anyone for no charge to see where you’re at, where you need to be, how I can help. Uh, you could text me all on our website is all our information of how to contact us so that we can spend a few minutes together figuring out how you can do better and how we can be a part of that.
Perfect. For me. I’m always looking to elevate the profession, the awareness, and the consciousness and the profession. And if you have any similar consciousness or traits or interests, you need to get in touch with Dr. Randi Ross. Use her skill, her expertise, her knowledge, her team. I promise you it’ll come back in spades. Have a great day everybody.
Checkout our other Thrive In Fives
Don’t forget to learn about our Practice Growth Calculator
Click The Image Below to Learn How Today’s Most Successful Practices Use