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The Key to Succeeding in Business

The Key to Succeeding in Business
One of my favorite sayings and a critical component I teach to all of my medical practice consulting clients in my proprietary “7 Fundamentals to a 7-Figure Practice” training is, “Inspect what you expect.” If you don’t have systems, processes and procedures, and a way to track your business analytics; or you don’t know your numbers, or even what numbers you should be tracking, then you are setting yourself up for failure. 

One of my favorite sayings and a critical component I teach to all of my medical practice consulting clients in my proprietary “7 Fundamentals to a 7-Figure Practice” training is, “Inspect what you expect.” 

If you don’t have systems, processes and procedures, and a way to track your business analytics; or you don’t know your numbers, or even what numbers you should be tracking, then you are setting yourself up for failure. 

Even if you do have the best practice management software in place with a comprehensive dashboard that is integrated and updated hourly, it only works if you are using it to your advantage. This means running reports on a regular basis (weekly, monthly, quarterly and yearly), and reviewing the right Key Performance Indicators (KPIs).

No matter what stage your medical practice is in, there are so many business decisions you need to make. The bottom line is without knowing your numbers, you cannot scale, you cannot make informed decisions and you cannot course correct. 

I have worked with hundreds of medical practices, and I have found that most do not know which metrics to use and are not using KPIs at all. 

I have seen practices spend thousands of dollars in marketing efforts without tracking what is actually working and converting. Without knowing how many leads your marketing dollars generate and how many of those leads convert into clients, you are literally throwing money down the drain. 

Critical Numbers and Common Benchmarks

When I work with my clients, whether it is one-on-one, at my live sales trainings, or via my online course, we take a deep dive in what baseline KPIs are needed and how to figure out the calculations. 

Here are some of the most critical KPIs to measure:

•    Net profit
•    Revenue per hour
•    Average revenue per invoice
•    Revenue per provider and procedure 
•    Conversion rates (phone, web, consults)
•    Operational – staff capacity and productivity
•    Lead acquisition cost – what is converting and how much is it costing 

And, here are some common benchmarks to keep in mind:

❖    High performance medical practices should run at a 70% capacity. If you are nearing 65% to 70%, you need to hire someone else.
❖    Rent should be no more than 4% of total expenses
❖    Costs of goods should be 30% to 40%; injectables can be a high as 50% of expenses
❖    Keep payroll under 30% of expenses
❖    Marketing should consume 10% of total revenue 

If you are looking at these numbers and benchmarks and are lost, or know yours are out of alignment, trust me, you are not alone. I am here to help. My team can perform a practice assessment, starting with the pre-work of a gap analysis, an enhanced 21-page deep dive look into your practice where we analyze your entire practice and the data, and give you a plan of action with recommendations that will improve the health of your business. 

Expert Advice and Best Practices on Reports/KPIs

Here is some advice and a list of suggested best practices from my colleague, senior practice analyst Randy Torban of Symplast: 

KPIs should be viewed by the day, week, month, quarter and year, and comparisons should be made year over year. Going back three years helps with trends, which in turn helps with forecasting.

The KPIs that medical practices, medspas and aesthetic clinics should focus on can be determined by how long the “business has been in business.”

For example:
 
A new business (open 0-12 months) should be focused on:

❖    Total revenue
❖    Revenue by provider
❖    Revenue by lead source
❖    Total leads
❖    Total appointments booked
❖    Total appointments by service
❖    Total number of cancellations
❖    Global conversion rate
❖    Total expenses
❖    Total profit

An existing business (1-3 years) should focus on:
❖    Customer acquisition cost
❖    Marketing ROI
❖    Staff capacity
❖    Gross profit
❖    Profit by service
❖    Profit by provider
❖    Avg. invoice
❖    New vs. existing patient ratio
❖    Percentage of returning patients
❖    Lead-to-patient conversion rate

An established business (3-5 years) should look at:
❖    Natural growth rate vs. actual
❖    Forecast vs. actual
❖    Marketing ROI per channel
❖    Goals completion progress
❖    Machinery capacity
❖    Avg. revenue by provider
❖    Payroll expense ratio
❖    Cost of goods sold (Cogs) ratio
❖    Avg. time from first contact to service
❖    New initiatives ROI

Businesses that have been open 5+ years have slightly different KPIs that we can help you identify and manage.  

Remember, it’s a numbers game, and you need to be in it to win it!  

As always, my team is here to help you launch or scale your practice. If you have any questions about systems, software, reports and KPIs or how my programs can support you, I am happy to schedule a  15-minute discovery call. Click here to schedule. 


About the Author

Terri Ross

practice management, marketing, business, revenue, practice, profitsMs. Ross is the founder and CEO of Terri Ross Consulting, which offers services to evaluate practice processes and recommend strategies to optimize revenues and business performance. She brings more than 20 years of corporate global sales and management experience in the medical device industry, along with a vast knowledge of the plastic surgery and aesthetic space to help launch, grow, or scale medical spas or cosmetic surgery practices. She has achieved multiple awards and is a recognized leader in the aesthetic field. Ms. Ross works closely with aesthetic practices and uses her wealth of experience in plastic surgery management to develop systems and processes that will make businesses more efficient and more profitable. 
 

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