Use these tips from Dr. James Guenther to make sure you're measuring up in your equine practice.
Having trouble meeting the mark in your equine practice? Dr. James Guenther, consultant at Strategic Veterinary Consulting and Veterinary Economics Editorial Advisory Board member, breaks down three areas to focus on to make sure your practice is measuring up.
Perk up your profitability
Make sure your margins are at a minimum 10 percent, with 12 percent to 15 percent fairly ideal. The first way to increase your profit is by not being afraid to charge the accurate price for your services—you’re worth it. The second is to market yourself. Make sure your image is good by getting on Google and making sure all your reviews are good. The third way you can increase profits is by recommending additional needed services. If you don’t make extra recommendations, only 5 percent will opt for more, but if you suggest extras to every client, maybe 20 percent will.
Eye your inventory
Make sure you have the right amount of inventory. Only 15 percent to 20 percent of your gross revenue should go to inventory. Get on your computer and find out how much of each item you need to stock up on for a month. Don’t be afraid to keep smaller amounts. The more inventory on the shelves the more money you are tying up as well as a greater risk of shrinkage by loss, theft and going out of date. You can also say it is the time value of money. The longer you keep something before selling it, the less you are actually making off of the product. Move the product in, sell the product and be able to pay for it from the money received for the sale of the product. Also, make sure you’re keeping up with costs and increasing them as they increase or you can lose money on products. And make sure you’re charging for every product you give out or you’ll be experiencing a 100 percent loss.
Adjust your accounts receivable
Lots of practices allow billing for everyone, but you can’t do that. There should only be 10 percent of transactions in your accounts receivable at the end of the year. Yes, you may loose clients because they like the fact you are not charging them interest and giving them unlimited time to pay for the service. You have to ask yourself if these clients worth the headache of constantly badgering them for money. If they come back they will play by the rules. For the practitioner who finds it difficult to start a pay as go policy then they should consider billing immediately after doing the work, institute a service charge for delinquent bills or hire an assertive person to handle your AR. They will pay for themselves quickly by being the change master for the practice. That’s cash that can be paying for inventory and staff improvement. Start vetting your clients to decide what clients you want to bill and who you need to ask to pay on the spot. If it becomes a problem, look for a third-party payment option for clients.
By focusing on profitability, inventory and accounts receivable, you can make sure your practice is headed in the right direction and cash flow is where you want it to be.