The Cost of Making a Financial Decision During Burnout

I

am about to tell you a story of just how costly it can be to make a financial decision when you are emotionally “burned out,” exasperated, and fed up. SO PAY ATTENTION.

Let me tell you about Dr. D. I would put her in the top percentile of practice owners I’ve consulted. Here’s why: she understands and applies business systems, knows the value of organization, markets well, maintains a very high profit margin, and she understands the risk associated with practice and business ownership. She doesn’t give things away and her practice is incredibly solvent and expansive because of this.

BUT, last year she was fed up. I mean COMPLETELY fed up.

Staffing issues, long hours at the office, and attacks from disgruntled former employees finally caught up to her and she considered selling the whole thing. She had a corporate buyer knocking on her door ready to give her $5.2 million for her practice.

She could have said “YES” right there, pocketed the money, and been on a beach. But she was intelligent enough NOT to make a huge financial decision when she was emotionally in a bad place. Plus, she knew to check with her guide (me) before she made any major financial move.

We looked at the deal together, went over the sale amount, the tax implications, how much she would have to pay off in debt, what her income streams would be, how the proceeds would be invested, and multiple other important factors. The point here is that she LOOKED at the situation and worked with an expert team (us).

Then she looked at the bigger picture—how this would affect her staff, her family, and if it was beneficial for her longer-term goals and purposes. Finally, together we discussed the sources of why she was so “burned out” to see if this was just a short-term issue that could be corrected quickly with a few management tools, or if this was truly the end game for her.

Strategically, she looked at the whole chess board, not just the next move. Ultimately she decided NOT to sell the business at that time (remember her offer was $5.2 million).

Fast forward one year, Dr. D was in a much better place emotionally as an owner. Things were going well in the practice, her team was productive, they were helping a ton of patients, and her revenue was up.

The corporate buyer came knocking again—but this time they offered $6.4 million. So we looked at the deal again, did the same analysis as before, and based on all things considered she determined that this could provide her the lifestyle that she wanted to have. So this time she took the offer.

The lesson: by NOT making a financial decision when she was in a bad emotional state she was able to obtain an extra $1.2 million in value from her practice. Chew on that for a minute! When everything and everyone around her was telling her to “GET OUT NOW,” she avoided a $1.2 million mistake simply by not making a rash decision!

So here are 3 takeaways from this story:

  1. NEVER make a financial decision when you are feeling overwhelmed or stressed. IF you do then the results may not be favorable and could end up costing you MILLIONS.
  2. When faced with making a financial decision, look at the whole situation and how it would affect everyone in your life (including your employees and your patients).
  3. Make sure you have a good team of advisors who understand your specific business and are competent enough to help you navigate through this process. You want to choose people who have a track record of working with other business owners in your profession.

I often promote myself as a practice owner’s BFFF (Best Financial Friend Forever) because our company is focused on helping practice owners navigate the turbulent financial waters, allowing them to make confident financial decisions. We have worked with over 500 private practice owners helping them improve their personal and business wealth through a Results-Based Financial Planning system built specifically for them.

EVERY practice owner needs a financial advisor who understands how important their business is to their household, stands by them when times get tough, holds them accountable, and guides them to be the financial hero they always wanted to be.

We want to be your guide. It’s what we do for practice owners like you! Let us guide and advise you on your financial journey—no matter what phase of ownership you are in. Our goal is to empower you to make the best financial decisions and propel you into the next stratosphere of success.

Do well, Owners!

Eric Miller, Your BFFF®

Advisory Services offered through Econologics Financial Advisors, LLC., A Federally Registered Investment Advisor.