This article is a continuation of “Where is Your Net Profit? – Part One“ If you haven’t done so yet, we recommend reading the first article to get a better context when reading this one.
- Does your staff work overtime, thus causing you to pay time-and-a-half or even more? Do you have systems in place to prevent that from happening without your express authorization?
- Do you have redundancy in your staff schedule or are you scheduling to ensure efficient use of your personnel? For example, do you have five staff members on duty when four will suffice during the slower periods of the workday?
- Do any staff functions needlessly overlap?
- Do you have an office communications system that facilitates efficient communication and deters staff members from interrupting one another when they are doing their jobs?
- Is gossip and rumor commonplace in the office?
- Are there any problem staff members who aren’t being handled?
- Do you conduct job reviews on a regular basis?
- Do you know how to screen and hire job applicants to ensure you assemble the best possible staff?
The management and staff-related issues are just some of the facets of your practice that you should be monitoring every day to help you with running your practice and to ensure that you can spot and handle any problems with regard to your net income.
Your net should lie somewhere between 25-55% of your gross income. Your specific percentage will of course depend on your profession, length of time in practice, demographics, etc. If your net income is not currently within that range, there’s something wrong with the management of your office.
The best way to increase the net income of a practice is to increase the efficiency of the staff. Accomplishing that begins with you, the practice owner. YOU have to put the appropriate, effective systems together and you must ensure that monitoring, training and the needed corrective actions occur in order to bring about 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” that he will thoroughly understand what you are trying to teach him. You need to have very detailed job descriptions in place for EVERY aspect of your practice so that people have something IN WRITING to which they can refer when learning and training. You will gain compliance and consistency from your staff in that way.
A job done only once is a job done efficiently. 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.