Where Is Your Net Profit? – Part II
I would start by taking a look at what might have happened:
- Do your staff work overtime? Do you have systems in place to prevent this without being notified?
- Do you have redundancy in your staff scheduling? Are you scheduling for efficiency? Do you have 5 staff members on duty when 4 staff will do during the slower times of the day?
- Can you consolidate your equipment and/or practice loans into one loan, thus saving you interest and lowering your payments?
- Can you reduce the amount of inventory the practice holds?
- Are you collecting all that you bill? Are your collections 97% at least?
- Are any staff functions overlapping?
- Do you have an efficient office communication system whereby staff are not interrupting other staff when they are doing their jobs, thus reducing efficiency?
- Do you have any monitoring system to know, factually and statistically, who is productive and who isn’t?
- Is there any gossiping going on in the office?
- Are there any problem staff members who aren’t being handled?
- Do you have office policies?
- Does each position in the office have a fully delineated job description?
- Do you do regular job reviews?
- Do you know how to screen and hire the best possible staff?
- These are just some of the areas that you should be monitoring every day to help you with the management of your practice and figure out any problems with your net income.
Your net should be between 25%-55%, depending on your profession, length of time in practice, demographics, etc. If it’s not, there’s something wrong with the management of your office.
The best way to increase net income of the office is to increase the efficiency of the staff. This starts with you as the practice owner. You have to put the correct systems together and the right monitoring, training and correction in place in order to create efficiency in your staff.
For example: if your training consists of verbally telling someone how to do something, you are leaving it up to “selective memory” and if they will completely duplicate what you are trying to teach them. You need to have very detailed job descriptions in place for every aspect of your practice so that people have something in writing to refer to when learning and training. You will get compliance and consistency from your staff this way.
A job that needs to be done only once is a job efficiently done.
A job that needs to be done only once is a job efficiently done. The more efficiently the staff works, the less people it will take to do the jobs in your office. Efficiency = profitability. It’s just that simple.