Are you comfortable with the financial decisions you’re making as a practice owner?
In episode 13 of “Can I Ask You One Question?”, I ask Adam Cmejla, Founder & President of Integrated Planning and Wealth Management and host of 20/20 Money podcast, to discuss the 3 biggest mistakes that practice owners make.
Below are the key points from the interview. Scroll down to see the entire interview.
1. Lifestyle creep
Adam defined lifestyle creep as allowing the cost of your personal quality of life to continue to rise with the production and revenue of the practice.
In the absence of any formal plan, accountability or intention, some ODs continue to let their spending habits dictate their savings habits.
“You can eventually spend your way up to needing every single dime of residual cash flow out of the practice in order to support your personal quality of life.”
This makes it difficult to reinvest back into your practice.
When times are good, this may be less apparent. When trouble strikes (ie. Pandemic), lifestyle creep leaves you exposed.
2. Not investing in their team
Underpaying staff often leads to high turnover.
“If you want rock star team members, you’re going to have to be on the high end of that pay distribution scale.”
Not investing in your team can be a result of point 1 above (lifestyle creep).
3. Not being efficient with money
Adam used the term “lazy money” – The OD is sitting on a lot of extra cash in the practice because they’re not sure what to do with it.
He mentions 3 ways that lazy money could be invested:
- Back into the practice
- In yourself, personally or professionally
- Other investments – ie. 401K, Roth IRA, 529 for kids
“Let your savings habits dictate your spending habits and you’ll be just fine.”
Watch the interview below:
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