I recently came across an interview I did for a magazine back in 2002, a few years after I opened Charles Grayson—one of the first day spas in the United States. Even though the industry has seen many changes and evolutions over the past 33 years, what struck me was that the foundations of a successful business have remained the same.
I was quoted in the article saying “The success of your business is loving what you do, having advisors you trust, and the ability to accept constructive criticism. If you cannot or will not assess your weaknesses, you cannot grow to your full potential.” I still stand by that quote today.
As a rule, I find that most medical aesthetics practice owners love their businesses, but don’t enjoy the numbers. I get that. I used to hate the numbers, too. I’m not a numbers geek, and I didn’t love math in school. But when I opened my company, I knew that I had to overcome that weakness for the sake of the business. Because it’s “sink or swim” in business if you don’t pay attention to the financials.
I began to understand more and more that benchmarking and using Key Performance Indicators (KPIs) were important, but without a solid foundation, systems and structure in place, numbers are just digits.
Over my career, I’ve helped develop at least 50 new practices from the ground up and have consulted with hundreds of existing practices. Here’s what I know for sure…
Truth #1 — Knowing your numbers does you NO good, unless you are going to DO something with that information!
If you take nothing else away from this blog, that one sentence says it all. Knowing your numbers does you no good, unless you are going to do something with that information.
When I teach and coach about creating systems to help you understand and evaluate your numbers, I take it a step further and teach you how to use your numbers to:
Grow your business, increase revenue and profitability
Set company goals and team goals
Define what KPIs are important and how to coach your team
Creating a Strong Foundation and System
If you are just starting out, you have a unique opportunity to build your financial house on a solid foundation by setting up your financial systems and patient management software so you can easily measure and manage your KPIs. If you have an established practice, it is never too late to better understand the gaps and make the necessary corrections so that you can utilize your data to grow your business.
What I find when I work with clients is that most of them take a look at their Profit and Loss (P&L) statements, see the numbers and wonder where all this “profit” went. Just because you’re showing a profit doesn’t mean that you have money in the bank.
You’ve got to take a deeper dive into the data and decide how you will use this information to make informed decisions that will positively impact your business. Moreover, how you plan to communicate and share it with your team.
Knowing your Numbers and How to Use Them
Numbers are simple – simple calculations can tell you how many working hours are in a month, how many hours you have to sell, how many hours you actually utilize, and what your revenue per hour is for each provider or service.
Once you know your revenue per hour for each provider, what are you doing with this information? If they are below industry standards, how are you coaching them? How will you set goals for them?
For example, if a Nurse Practitioner (NP) has the capacity to generate $700 per hour in revenue but is at 50% productivity, how are you going to coach that NP and set incremental goals that can be evaluated and measured along the way? It takes a huge amount of communication. Which leads me to another thing I know for sure…
Truth #2 — Everyone in the practice is responsible for growth.
As a leader in your practice, it is your responsibility to empower everyone on your team to have a stake and skin in the game to support the overall growth.
How do you do this? It requires you to be transparent, and to communicate, communicate and communicate. It is both the owner, and your practice manager’s job to provide engagement, guidance, a system and structure to set productivity goals, and to honor and discuss those goals on a regular basis.
Here are some questions to consider:
Is your compensation aligned with the company goals?
Does your compensation system have a career path for your staff?
If they are entry level, do they understand where they can go and how they can advance?
What skill set do they need?
What training will you provide them?
Do they understand how they will be evaluated and have revenue targets or clearly outlined goals?
Are you empowering them with the responsibility to help the practice grow?
Are you looking at staff turnover rates?
Do you conduct exit interviews to evaluate and improve?
Do you have clear Standard Operating Procedures (SOPs) for staff evaluations?
Is your manager evaluating the numbers on a weekly, monthly, quarterly, or semi-yearly basis?
Are they having morning huddles with the team to go over daily goals and communicating on a regular basis?
If you want your team to sell more, you have to give them goals and invest in them so they will invest in you. You cannot expect someone to perform without clear expectations and guidance. And if they are having a problem, you have to coach them and give them tools and resources to help them succeed.
This might seem like a lot of work on the front end, and it is certainly easier NOT to do it. That’s why so many complain after the fact and wonder why their practice is not growing the way they anticipated.
Systems and structure really do create freedom. When you have systems in place, honor them, and then communicate them, things begin to flow and become easier and seamless.
We’re Here to Help
Terri Ross Consulting has some exciting new programs, courses and training in the works to help you put all these financial systems in place, so stay close.
Terri Ross can take your business to new levels, whether you’re looking for exclusive private strategy sessions, corporate sales training, or a keynote speaker for the next major aesthetic event. Book Terri Ross today to take the first steps in giving your business the tools it needs to succeed in this incredibly competitive landscape.