Not sure how to best handle your finances during this economic downturn?
In episode 23 of “Can I Ask You One Question?”, I ask Adam Cmejla for his insights.
Below are the key points from the interview. Scroll down to see the entire interview.
One of Adam’s favorite quotes… “What gets measured gets managed, and what gets managed gets improved.”
If there was ever a time to understand the numbers of your practice, certainly now is that time.
If you want to keep the net income of your practice the same, you have 2 options…
- Reduce cost
- Increase revenue
Both are important, but too much focus on the first introduces a scarcity mindset, feeling there’s nothing more to gain on the revenue side.
On the topic of costs, a few key areas to look at are cost of goods and human capital (OD and non-OD staff). Have there been shifts in these areas?
Another area is interest expense, especially in a rising interest rate environment. Adam mentions 2 specific types of debt.
- Callable loans
- Variable debt
Callable loans: Interest rates were fixed for a period of time with a balloon payment at the end. Should you pay that off or refinance that?
Variable debt: Potentially dangerous in a rising interest rate environment. Try to fix what costs you can.
On the income side…
What is your pricing structure?
You have to be mindful of the revenues coming into the practice. If the prices are rising at the bottom but not the top, that’s reducing the amount of new income you have.
“We suffer more in our imagination than in reality.”
It’s important to let data drive our decisions, not how we’re “feeling” about something.
Check out the interview below:
Ps. No time for videos (even short ones)? Subscribe to the podcast: Can I Ask You One Question? Bite-sized content you can immediately apply to your practice. Available on most podcast platforms!
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