Empowering Women in Chiropractic -Can You Explain Your Profit and Loss?

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Hey everybody. I wanna thank ChiroSecure for hosting today's event. Make sure to visit their website. Great people, really great products for the profession. I am Dr. Randi Ross, CEO of Premier Practice Consultants, and today I wanna take you down a little path of what I like to refer to as a financial exercise.

Something that a lot of us feel a little uncomfortable doing, or we get a little lazy and we don't wanna do it. But when you do it, it can be dramatically eyeopening. So today what I'm talking about is looking at your profit and loss, your p and l statement. What I suggest is you take the last full year, 'cause that's going to give you that broader picture than just a snapshot of a section of the year or a couple of quarters.

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And I really want you to take the time focus not distracted, and I want you to go line item. By line item. Now, some things are obviously very obvious as to what they are, your rent and things like that. But I think what you're gonna find when you go through there, there's gonna be some things in there that you don't necessarily understand what the fees are.

And there's gonna be categories that are a few things kinda lumped together. And often accountants. Now remember, no, there's no standardized way of doing accounting. There's no two accountants that do anything the same way. Your business is unique to you and how they structure that. So there's not like a formula or something that we're using here.

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That's why I do this exercise with people because again, it's really important. So you're gonna get to certain line items that are gonna be very, I'll use the word generic. So they might just say. Insurance. I'll ask someone what's in there? Nine and a half times outta 10. They're like. Not sure you should know.

This is your business. You should know what everything is when it comes to your finances, how things are being categorized, and how they may or may not be being deducted from your total income and rendering a tax position for you. So I suggest those categories that you're not sure what they are, make a list of them.

Go back to your accountant and or maybe your bookkeeper and ask them what's in this category? In other words, is this all office expenses? Is it maybe malpractice? Do you have an associate? Are you paying their malpractice? Is it include the insurance that's required from your landlord? Is it business overhead insurance?

Is it disability insurance? The reason why it's really important to understand that is 'cause sometimes when you dig down in there, you will often start to find things that you go, oh man I didn't know I spent that much money on whatever the item is. And it really starts to open your eyes as to where the money's flowing out of the office and out of your pocket ultimately, and often you can find ways to cut your overhead.

The other reason why this is so important to do is. If you find yourself in a position where you either want to or need to offer your practice for sale, your p and l being able to explain every single line item is so critical. To a buyer and to a bank and or to an investor. You should be doing this quarterly.

You should really understand every single line item, and especially those ones that are a little bit on the vague side. I'm not saying that anyone's doing anything wrong. I'm not saying you and or your accountant or your business manager or your bookkeeper, I'm not saying anyone's doing anything wrong.

But I find every single person that looks at their p and l will go, wow, I really didn't know where I was spending certain money. I really didn't realize. That we were spending money on whatever it might be, and you can often, again, find ways to cut your overhead. The other really important thing to understand off your p and l is what is actually what we refer to as an add back.

So an add back is something that you may be able to, according to the tax code, write it off as a business expense. But it's really not what we refer to as a pass through expense. In other words, if someone else came into you practice, those are expenses that the easiest way to describe it is they leave with you and understanding your ad box are also really important.

Some things, again, super obvious. Obviously, your car payment would be an add back if you're paying health insurance, not for your any staff members, but for yourself and your family. That would be considered an add back, and having that column of understanding the add box really gives you a check and balance as to.

Okay, here's how much money I'm really putting in my pocket. And again, understanding that what we call true net, not the net that it looks like on the bottom of your p and l, not the net that it looks like on the bottom of your tax return. But really what is the amount of money, the profit, whatever word you wanna use, that you are actually putting in your pocket at the end of the day, doing this exercise quarterly, or at the very least semi-annually.

Really helps you track your business. It also gives you that snapshot over time as to what do you look like in comparison to the previous year. That's really important to understand, are we, or do we have the same revenue? Are we off? How much are we off? Then you start looking at why are we off?

Are we off because there's less revenue coming in, or are we actually off on your net? My net. Because we're spending too much money and maybe there's places that our overhead is either redundant or possibly things that we don't really need. They're not adding value to the business, and we could probably cut back on some of those things.

Again, this is a great exercise in your financial stability of your business and understanding this, tracking it, really digging down and even question your accountant and your bookkeeper on some of those categories that you're not sure about. And some of them they might not know, they might say, I'm just dealing with the data that you gave me.

That data could be, certain office supplies is a big category and maybe you go to Costco and only half the stuff that you buy is really for the office. And the other half is really, for personal use. It's okay. Just note that and understand it, 'cause otherwise expenses have a tendency to get away from us when we're really not tracking them properly.

And most times, unless there's a dramatic or a gross kind of change, your account may not even point it out to you. But this is your business and it is your responsibility to understand every element of it, and that includes this financial element. You should be able to pull up a p and l for your business and get me on the phone and we're looking at it on a screen share.

You should be able to explain to me every single line item, and I don't mean the p and l that's inside your tax return. The p and l, that's one to two pages for most people. And really going, we should be able to go through that line item by line item together, and you should have an explanation for every question I have for you.

And if you don't, you're not tracking your business adequately. Again, this isn't a financial exercise in being more efficient, which makes you more effective, which makes you a better provider, which puts more money in your pocket. And at the end of the day, when you are working hard, why not put as much money in your pocket as possible?

So feel free to reach out for me as you do this exercise. I'm happy to always entertain questions. I'll even jump on. A screen share meeting with you. Go through your p and l and teach you the things that you need to point out that are specific to you and, spend about 20, 30 minutes with you and take you through this exercise.

And I promise when you do this, you'll find things that you're gonna go, oh man I didn't know I was spending money there. I didn't know how much money. We were spending there. There's a great exercise for any business and unfortunately, small business owners have a tendency to avoid this process.

But, again being, being a successful business person, no matter the size of your business, it really obligates you to track certain things, and this is one of them. I am Dr. Randi Ross, CEO of Premier Practice Consultants. You can find me anywhere. Send me a message. I'm happy to spend some time with you.

I'd like to, once again, thank ChiroSecure for hosting this event and giving me the opportunity to share some important information with you.

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