Driving Profits In Your Podiatry Practice
I don’t want to do business with those who don’t make a profit, because they can’t give the best service. -Richard Bach
Profits determine our ability to grow our practice.If we’re not generating positive cash flows and sustainable profits, our practice is bound to fail.
At the Podiatry Hive, we are keen to help you increase your profit. Every Podiatrist grapples with a wide range of issues, constantly looking for the critical factors that drive profit. But are we looking in the right places?
Some of the common concerns small business owners have regarding profitability are:
- Inefficient systems (business waste!)
- Failing to target the right customers
- Poor pricing
- Lack of attention to cash flow
- Focusing on cost cutting rather than increasing revenue
The challenge is how we can increase profit and still provide value to our customers?
We need to know what the key drivers are to our business profitability.
Why do you need to drive profits?
Healthy profits fuel our business growth. Low profit levels hinder us from putting money back into our business and keep it growing. This causes delays in being able to hire new staff, buy more equipment or invest in other specialised services.
The first step to profitability is to have a clear picture of your business performance, which extends beyond your finances and should include all aspects of your business.
Produce reliable management accounts to pinpoint what profit your practice is generating and evaluate where your practice can become more efficient e.g. sales revenue, gross margin.
Where are we making a profit?
Identify which aspects of your business are profitable and which are not. Are you targeting the right market? What types of customers are using your services and can you serve them profitably? Are you maximising the revenue you are getting from your existing customer base?
Do a Pareto analysis to determine which 20% of your customers are the most profitable and how you can extend the services you provide to them.
Look at the profitability of each of your client segments. Which ones represent the most value for your practice?
Now consider your pricing structure.
In previous iBLOGs and articles of The Buzz – we have delved into how to set your pricing structure to improve your bottom-line.
How much we charge for our services significantly impacts our performance and this needs to be reviewed regularly. Do you think are you charging as much as you could? Are there add-on services you could introduce?
The profitability outlook of your business is affected by almost every aspect of your practice the services you offer, your people, inventory, equipment and so on. Up to date and comprehensive information on these areas will help you pinpoint where you are making money and where you are not.
How do you compare to other practices?
We need to spend money in order to run our business. We need to be equally mindful of where we’re spending it.
Benchmarking your practice is a good indicator of how you are performing in comparison to others in your industry.
The Podiatry Hive has a Buyers Group that only members are able to access.
In the Buyers Group, you can take advantage of substantial discounts on a wide range of goods e.g. Orthotics, Insurance consumables, Office supplies, Orthotics Bracing and so much more.
Efficient operations and smart buying helps keep your costs to a minimum and enables you to offer a competitive pricing structure. It is the best way to give your patients the service they need at the price they value, whilst maintaining the quality they expect.
We all strive to make our businesses profitable and increasing our revenue is only one side of the equation. The bigger picture of a profitable practice lies in finding where we can improve the margin between revenue and costs.
Looking forward to helping you increase the profits in your practice!
til next time,
Greg Gunther.
Director, The Podiatry Hive.
