Episode Details

In this episode of the Practice of Therapy Podcast, Gordon talks about having a sustainable and profitable private practice and some of the mindset changes he has made around all this. Gordon shares how the book, Profit First by Mike Michalowicz, has changed some of his thinking around the financial side of private practice. In particular, Gordon talks about getting away from some of the traditional ways in which we think about money and how to use it. It's a mindset shift of not letting what you gain financially from your practice being just the "leftovers". It's about maintaining a lifestyle that is comfortable and sustainable over the long haul.

>>Enter the Sustaining Your Practice Giveaway

This past month we had to buy a new car. My daughter was in an accident (No one was hurt thank God!) and so it was a "have to" kind of situation; the car was totaled. And whenever you have to make a big money decision like that, it really causes you to think about your money.

Like most of us average people, making a big purchase like that comes with an "ouch factor". Could we afford it? What kind of car could we get with money we had budgeted? So needless to say I started thinking about how I was managing my money, not only at home but in my private practice as well.

I had heard a lot of "buzz" about the "Profit First" system, but quite frankly, had not looked into it much. So last week, I was taking some time away from the office to spend a week doing some volunteer work and decided to take the book, "Profit First" by Mike Michalowicz along.

For the most part, the concept of "profit" is just common sense. Very simply put, it's the money you get to keep from your business after people pay you for your services. The traditional formula is simply:

INCOME – EXPENSES = PROFIT.

The traditional way of thinking about profit is what money is left over after you pay your expenses. So the idea is you keep your expenses low and increase your income to make a profit. And it does work mathematically. But what if your income goes down and/or your expenses go up. It can create A LOT of anxiety.

"Profit First" is a term coined by Mike Michalowicz that turns our traditional way of thinking about profit on its head. Instead of taking your profit from what is left over, Mike says take your profit off the top, then pay your expenses.

INCOME – PROFIT = EXPENSES

The truth of the matter is that most people tend to live paycheck to paycheck. And unfortunately, many of us in private practice tend to run the business side of the practice that way too. We'll wait to pay ourselves after we have paid all the expenses.

What this does is have us biting our nails at the end of each month to see what we can take home. Hopefully, we will have enough to pay ourselves AND put some in savings to use as a buffer. Unfortunately, very few people get ahead doing it this way.

A better way to do this is to take what you pay yourself AND your profit on the front end, then use the what is left for your expenses. Again… sounds crazy and a bit risky.

But the truth of the matter is that when we get control of our money, rather than it controlling us, it can be very easily done.

First of all, do take time to read "Profit First" by Mike Michalowicz to get more details. Also, consult fi