Are you worried about the economy? Wondering how it will affect your practice? Wondering what you can do to increase your revenues?
Managing a small business (and yes, a private practice IS a business no matter how small), is not an easy task during tough economic times. But, the good news is that there are ways to keep your practice profitable, even during downturns, even when your client billable hours are not increasing or even declining.
There are basically two ways to stay profitable: Increase revenues and/or cut costs. Here are some cost-cutting tips to help you deal with economic uncertainty:
Minimize staff and maximize talent. A friend’s consulting clients recently encountered hard times. She offered two nonessential employees an extended leave of absence (with a promise to call them back when the economy improves) and replaced them with an answering service. “Electronic Medical Records reduce the need for clerical staff by reducing staff workload and improving work processes.” (Tricia L. Erstad, MSN, RN, Journal of Healthcare Information Management, Vol. 17, No. 4). While layoffs aren’t pleasant, a company and its employees might not have a future without efforts to trim the budget. Job sharing is another option to across-the-board layoffs.
Cut back on or share advertising. Calculate your monthly advertising fees. You may find that you could save more by reducing the size of print ads. Try negotiating better rates with where you advertise. Most companies would rather negotiate than lose your business. Keep the smaller ads effective, however, by adding red ink for emphasis or bolding critical text. Notice we say “cut back” but do not eliminate your advertising. This is the best time to advertise and pick up those clients that are out there looking for a therapist! If you don’t, your competition will. Do some joint advertising with colleagues who have a different specialty from yours and share the costs of the ads.
Learn new skills. Reclaim some of the tasks you currently pay someone to do. For example, one therapist used to pay someone more than $400 a month to burn CDs and training DVDs. He also paid a printer to collate and staple information packets. Paying an employee to collate and staple cut his production costs in half.
Purchase in bulk. Many companies overstock inventory in anticipation of a rush on product. Negotiate terms with your suppliers that allow you to purchase as needed with smaller minimums. That means you’ll pay less upfront. Check with a few colleagues and purchase office supplies jointly for a bigger discount.
Review your policies and implement other cost-saving measures. Review your worker’s compensation, vehicle and office building insurance policies. Some coverage may be redundant. Work with your insurance carrier to determine if policies can be grouped for a multiple policy discount.
Use your credit to your advantage. Credit card companies want solvency and on-time payment. If you have both, call the credit card company and negotiate a better rate, or take your business elsewhere. Credit card companies are settling for pennies on the dollar because of the large number of defaults and bankruptcies. Work your credit history to your advantage, and keep shopping until you find the best rate.
Know Your SCORE. SCORE, the service corps of retired executives is a great FREE federal program that matches successful, retired business executives with small businesses and offers advice and support. http://www.score.org/index.html
Attempts to cut costs can add up to thousands of dollars saved every year. Choose carefully, and you’ll be among the fittest survivors.
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