Part of my responsibility as a Financial Advisor is to observe and communicate what successful actions you as a private practice professional can do to ensure your financial future is certain and secure. The first step on your journey to obtain Financial Power is to Pay Yourself First!
The ability for you to be able to transfer a portion of your practice income each week and save it into some kind of Wealth Savings Plan is a staple of the Econologics Road Map® Results-Based Financial Plan® for Professionals. It is one of the most successful financial actions you can do to ensure the PROTECTION of the household and the business.
I have never met a private practice professional who has said to me that being able to retain the first 10% of the weekly collected gross income for the benefit of the owner is a bad thing. I know everyone aspires to do this. So why is it that 90% or more of professionals are unable to perform this most basic action?
Here are the most common examples of standard excuses I hear:
- Too much overhead expense.
- Not enough profit margin in our industry to allow for it.
- Accountant said it could red flag for an audit (fire that guy by the way).
- I have too much debt and bills to pay back.
- Payroll is too high for me to do it.
- Insurance companies pay us too slow and reimbursements are declining.
- Economy is bad and I don’t have enough patients coming in.
- And on… and on… and on… and on!
Does this strike a cord? Care to know the REAL reason why you don’t do it? Simple. It’s your current viewpoint. You are not treating the transfer of 10% of your weekly collected gross income as a required expense for the operation of your business. Yes, I said REQUIRED.
So shift that viewpoint. Almost all professionals I work with make enough in their business to cover basic expenses: payroll, rent, taxes, materials, etc. Very few of private practice professionals are so insolvent where the business doesn’t cover at least these basic expenses. Until you see this as a REQUIRED expense which needs to be paid each week, it will never consistently stay in.
I can tell you the reason why some have been able to CONSISTENTLY reach the goal of taking their 10% of weekly gross income: They set up a weekly automatic payment which they gradiently increase each month and they make it part of the operating expenses of the business and therefore make it the responsibility of the business to cover this expense each and every week.
95% of those who THEMSELVES tried to go in each week and pay this 10% eventually stopped this payment. The point is that MANY (not all) of you will not be able to consistently go in and physically transfer this 10% of the weekly gross income. You see the books, you know what bills are coming up, and you will have some reason why you can’t do it. I KNOW, because I have seen it over 200 times. YOU MUST SET THIS UP AS AN AUTOMATIC DRAFT EACH WEEK WHICH YOU FORGET ABOUT AND MAKE IT THE RESPONSIBILITY OF THE BUSINESS TO COVER THE EXPENSE.
Here is how I want you to do this:
- Determine what your average weekly collections have been for the last 4 weeks. For this example, say you are averaging $20,000 per week
- Set up a weekly automatic draft from your business checking account to your Everbank account (or whatever account you use) in WHICH THE TRANSFER OCCURS AUTOMATICALLY. I honestly just want you to forget about it!
- Start on a simple gradient and target increasing the draft each month.
- DON’T STOP THE DRAFT FOR ANY REASON – EVER!!!
Here is how it would look if you are averaging 20k a week in collections:
- Month 1: 3% of weekly gross income – $600 weekly draft
- Month 2: 5% of weekly gross income – $1000 weekly draft
- Month 3: 7% of weekly gross income – $1400 weekly draft
- Month 4: 10% of weekly gross income – $2000 weekly draft
I cannot emphasize how vital this action is to ensure the safety and security of your financial future and of those for whom you are responsible. PLEASE ACT NOW!