Compliments of Emily Chase, Esq.
Imagine you’re ready to learn to drive. You’ve never done it before. You’ve got the handbook and memorized all the rules of the road. You watch YouTube videos on how to fill the car with gas, change the oil and check the tire pressure. Then you sit behind the wheel for the first time and realize – you know a lot about cars, but not HOW to actually drive one.
Professions can be just the same. Dentists are taught to fill cavities and shame us into flossing. Lawyers are taught writing skills and how to argue their opponent under the table. Therapists are taught theories and methods. None of them is taught how to actually run a dental practice, law office or private practice. That is left to trial and error. Ouch. Trial and error is a painful, confusing place to be. Managing the financial side of your business doesn’t have to be trial and error, sink or swim. It’s not rocket science and it doesn’t have to be hard. Here are 3 steps to running a financially savvy business:
1. Mullet Theory of Finance
What is the defining characteristic of that most iconic of haircuts? Business in the front, party in the back. That separateness is key. You’d never see a mullet all mixed in together – it wouldn’t be a mullet. So it goes with business. Keep your business and your personal money separate. You don’t know what’s going on with your business if everything is all mixed in together.
Get a separate checking and savings account for your business. It’s nice to have them at the same back you do your personal banking with so that you can do quick transfers while still keeping a nice electronic trail of what happened. Don’t worry that your business isn’t big enough yet. Don’t worry that you don’t make enough money yet. You will and when you do, you’re already ready. Plus, the bank tellers have a quota of new accounts to open so you’ve made their day.
2. Keep Your Finger on the Pulse
Now that everything is nice and separate, you can see what’s going on. Pick a steady day and time of the month to look at your numbers. If you’re using accounting software, have it run a profit and loss. If you’re less sophisticated, look at your spreadsheet or bank statement.
Print them out and take an hour with your numbers each and every month. Here’s how you should use it:
- Review for 10 minutes. Familiarize yourself with the categories and numbers
- Circle for 10 minutes. Take a pen to it and circle anything that stands out, either good or bad, interesting or of concern
- Ponder for 20 minutes. Sit quietly and let your great brain process what you’ve read. See what comes up.
- Review for 10 minutes. Now that you’ve pondered, what do you want to know? - Take notes for 10 minutes.
Now that you know exactly what’s going on ask yourself. What is working? What do you want to change? What do you want more information on? Who do you need to talk to? This hour can be the most illuminating in your month. The notes you take at the end of the hour are action items. They are game changers. This is the leg up that will take your business to the next level.
3. An Objective Decision-Making Process You have your numbers and you know them. Now we tackle the shiny object syndrome. Every business owner is going to be presented with opportunies or have great ideas for their business. It may be to:
- Invest in a technology to improve your workflow
- Hire a staff member
- Enlarge some aspect of the business
- Start a new marketing plan
The list can go on and on. When you’re charged up in your business there is no shortage of great ideas. You want to insulate your business from the bad ideas and let it run with the great ones. To do this you need an objective decision-making process. This is the opposite of shooting from the hip. This is a promise you’re going to make with yourself about how long you’re going to wait before you pull the trigger.
Set the standard now before the next big idea. Are you going to wait 24 hours before spending over $1,000? Are you going to consult 3 colleagues for their wisdom before spending $5,000? Your standard is going to be personal. It’s going to reflect your business and your numbers. Barbara Corcoran isn’t going to wait 24 hours before spending $1,000, but a new therapist in private practice might. Remember, set a standard that insulates your business from the bad ideas and lets it run with the great ones.
These 3 steps aren’t hard and will make a huge difference in the financial success of your business – and not by trial and error!
Bio: Emily Chase Smith, Esq. is an author, speaker and coach. She’s helps business owners and entrepreneurs make financially savvy decisions as they start, grow and transition in their businesses because money only counts if you keep it. Emily’s is the author of The Financially Savvy Entrepreneur: Navigate the Money Maze of Running A Business, the host of The Entrepreneur’s Money Podcast and can be found at EmilyChaseSmith.com.
Big thank you to Emily for reaching out to us with some tangible financial advice! We got to spend some time with her and she is energetic and passionate about finances!
p.s. Emily Chase Smith, Esq. is doing a series of CEU trainings for therapists across California on the topic of running a financially savvy practice. Go check it out here.
p.p.s. When you consult with other colleagues about business decisions, please make sure these are people who understand your business vision, have experience marketing and developing a practice in the current climate, and that are people that aren't fearful of money. Unfortunately, I hear too many stories of therapists actually sabotaging one another in small and big ways. I have sooo many examples. One of my favorite examples is: Do what I did... but it isn't working for me... wanna sublet- I need help paying the rent.. (Please don't ask that person for advice!)
p.p.p.s. We are chatting with Emily Chase about including some of her awesome materials into our Business School Bootcamp for Mental Health Professionals. How cool would that be?