Episode Details

Gordon reveals his "why" for wanting to assist others with their finances. Then, Gordon divulges the number one reason most private practices fail because the owners have not prepared themselves financially for owning a business. Also, owners do not put the proper systems in place to fully understand how businesses work. Most private practices go under because the owners are worried about money, paying the bills, and financial stability.

Every private practice needs clients to see. Without clients, you will not be able to make money. The marketing aspect of finance depends on the number of referrals you acquire. Most private practices will make money from their referrals. Especially if your business is in the beginning stages, often owners will overload themselves with clients and be overworked.

The other side of your finances is the expense side, or what it costs to maintain your practice. Gordon says there is not much overhead in a service-based business. Some common expenses for private practice include internet, furniture, electricity, and phone bills. The other aspect of operating your business is maintaining a website so people can find you and make appointments. Also, if you are in a group practice, you will need to keep your labor expenses in mind.

Gordon reveals he is insurance based because of the demographics in his neighborhood. The area he lives in pretty much demands insurance panels. Without insurance, Gordon says it would be an uphill battle to get the clients he needs. Many of his clients depend on insurance, so it was a no-brainer for Gordon to be on an insurance panel. Your pay will depend on which insurance company you use. Usually, private practices that use insurance panels will have to see more clients than private paid practices.

Gordon suggests breaking down what it costs you to run your business per client and also find out what your average per session rate is. Gordon says you can do a lot of analysis just knowing these two figures. These figures will help you predict your cash flow and assist you in making future plans. Also, Gordon thinks it is a good idea to raise your rates periodically. For instance, Gordon plans on raising his prices on the first of the year.

With insurance companies, contract rates are fairly well fixed. Side tip, just because an insurance company gives you a specific rate, doesn't mean you have to accept it. Those rates are negotiable! Keep this in mind when you are thinking about renewing your insurance contracts.

Make sure you know what your gross net profit is. You can find it using this equation; gross net profit is income minus your expenses. As an example, Gordon says he gets 100 dollars of profit and it costs him 25 dollars per client, so he keeps 75 dollars per client. Another mistake people make in private practice is covering their expenses rather than paying themselves. Gordon says always to pay yourself first,