WP98 | Using Your Financial Story to Increase Profits with Nate Hendrikse
In this episode of the Wise Practice Podcast, host Whitney Owens introduces Nate Hendrikse, founder of Navigator Bookkeeping, to discuss the importance of understanding financial stories in private practices. Nate explains how practice owners can achieve financial confidence by analyzing their numbers and making informed decisions. He shares practical steps to manage bookkeeping, strategies for hiring, and optimizing clinician profitability. The episode emphasizes the need for good cash flow management and offers resources like the profitability dashboard tool and free tactical sessions for therapists. Whitney also updates listeners on her building purchase adventures and highlights upcoming events like the Wise Practice Summit.
Uncovering the Financial Story and Aligning Business Goals with Personal Vision
Nate explains that a financial story goes beyond just numbers, data, and reports in a business. Instead of simply focusing on metrics, he emphasizes the importance of uncovering the narrative behind the numbers to guide decisions that align with the goals of the practice and the owner’s vision for their life. Accounting often gets reduced to spreadsheets and colors, which can feel stark and disconnected. However, Nate sees numbers as part of a larger narrative, informed by the past and shaping the future. By understanding where the practice has been, where it is now, and where the owner wants it to go, he helps clients use financial data to make strategic decisions, whether it’s stepping back from clinical work or expanding to multiple locations. Ultimately, he believes that numbers only hold value when they serve the broader context of the owner’s personal and professional goals.
Guiding Practice Owners Through Financial Uncertainty
Nate highlights a common challenge for practice owners: lacking confidence in their financial story. Many experience guilt, shame, or fear around their numbers, feeling like everyone else has it figured out while they struggle. However, Nate reassures them that most entrepreneurs are also figuring it out as they go. By understanding their financial story, even if it’s not ideal, practice owners can regain confidence and start taking steps to improve their situation. Nate emphasizes the importance of not feeling alone in this journey, offering support and partnership to help them make informed decisions, from managing cash flow to thinking through clinician pay structures. He acknowledges that running a private practice is tough, with many stories and challenges, but believes that working through these challenges together can bring much-needed clarity and relief to practice owners.
How Practice Owners Can Start Uncovering Their Financial Story Independently
Nate emphasizes that practice owners can begin discovering their financial story on their own, even without external help. While working with professionals like his team can accelerate the process, he acknowledges that solo practitioners, especially those just starting out, can take meaningful steps independently. By dedicating just 30 to 45 minutes a month, practice owners can begin identifying key financial metrics and start moving in the right direction. These small actions can help them gain clarity and potentially increase their earnings, even before seeking outside assistance.
Tips for Tracking Practice Health with Accounting Software and Key Metrics
Nate advises practice owners to use accounting software, such as QuickBooks, to track their transactions, even if they’re unsure about perfect categorization. He emphasizes that simply getting transactions recorded is the first step. He suggests dedicating 30 minutes each month to review key financial reports like profit and loss statements and cash flow. Additionally, he encourages owners to create a dashboard to track essential metrics, such as profit and visits, over time. This habit of regularly reviewing and recording data can help owners gain a clearer understanding of their financial story and monitor the overall health of their practice.
Using Metrics and Tools for Practice Growth and Financial Management
Nate stresses that having accurate data is crucial for making informed decisions in a practice. Whether it's deciding to hire someone or determining pay structures, data provides essential insights into capacity, lead flow, and financial management. He recommends starting with a simple dashboard to track key metrics and gradually expanding financial tools and resources as the practice grows. Initially, focusing on basic reports and metrics can help practice owners make better decisions. As the practice scales, they can introduce more sophisticated tools and professional support to handle complex financial decisions, such as pay structures and employee incentives.
Show Sponsor Twin Oaks Medical Management
Navigating credentialing and insurance contracts can be daunting. That's where Twin Oaks Medical Management steps in. Their expert team specializes in seamlessly guiding your practice through this intricate process. They take the headache out of insurance by making sure that you are credentialed and contracted with major insurers. Not only do they handle the paperwork, but Twin Oaks Medical Management also negotiates competitive fee schedules that work for your practice. Imagine having the peace of mind of knowing that your financial agreements are optimized to support your growth and sustainability.
Expanding your network and increasing patient access is crucial for any practice's success. With Twin Oaks Medical Management, you can focus on delivering exceptional care while they handle the administrative complexities.
To learn more about how they can help with credentialing and contracting visit them today at www.twinoaksmm.com.
Show Sponsor Arc Integrated
Arc Integrated specializes in helping leaders navigate change with confidence. With personalized coaching, leadership training, and strategic planning, Arc Integrated helps clients reduce stress, enhance communication, and build emotional intelligence within their teams.
Clients of Arc Integrated report results like...
Improved leadership skills
Increased team cohesion
Enhanced organizational performance
Increased retention of employees
Visit www.arcintegrated.com/coaching to schedule a free leadership consultation. You'll have the chance to receive some tangible strategies to help drive the success of your practice.
Nate Hendrikse’s Resources
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Whitney Owens: Navigating credentialing and insurance contracts can be daunting. That's where Twin Oaks Medical Management steps in. Their expert team specializes in seamlessly guiding your practice through the intricate process. They take the headache out of insurance by making sure that you are credentialed and contracted with major insurers.
Not only do they handle the paperwork, but Twin Oaks Medical Management also negotiates competitive fee schedules that work for your practice. Imagine having the peace of mind in knowing that your financial agreements are optimized to support your growth and sustainability. Expanding your network and increasing patient access is crucial for any practice's success.
And with Twin Oaks Medical Management, you can focus on delivering exceptional care while they handle the administrative complexities. Learn more. About how they can help with credentialing and contracting. Head to TwinOaksMM. com. That's T W I N O A K S M M. Hi, I'm Whitney Owens. I'm a group practice owner and faith based practice consultant.
And I'm here to tell you that you can have it all. Want to grow your practice? Want to grow your faith? Want to enjoy your life outside of work? You've come to the right place. Each week on the WisePractice podcast, I will give you the action steps to have a successful faith-based practice while also having a good time.
Now let's get started.
Jingle: Where she grows your practice and she don't play. She does business with a twist of faith. It's Whitney Owens and Wise Practice Podcast for Whitney Owens and Practice
Whitney Owens: podcast. Welcome to the last practice podcast today We're going to be talking about the financial stories that we tell ourselves within our practice or really more So let our numbers tell ourselves in our practice.
They really tell the story, right? And so we have an expert Um nate hendricks from navigators bookkeeping who's going to be chatting with us about those stories Telling us some of the problems that come up within looking at our numbers and how to change those from solo practice all the way up to large group practice.
So you're going to get a lot of great content today. And speaking of saving for things, I do have updates about my building. As I mentioned in a previous episode, I told the story about purchasing my building and that I would give you updates along the way, because it is kind of fun to hear about things growing and changing and all this fun stuff.
Kind of fun, right? So when I was in the interview just a few minutes ago, I was even thinking about that as Nate was talking about saving for things, because guess what? It is a septic tank at the new building. Oh, goodness. I've heard the word septic before. It's not a pleasant word to say. We'll hear. But yes, I have a septic tank at the new building, or at least we think we do.
We haven't found it yet. So that's the new exciting drama going on at the building. Ironically, it's like we get this building, we're told that it's sitting in Savannah water. We call the city, they're like, we don't service you. We call the competitor, we don't service you. We find out that previous owners have been getting water from an arrangement from the neighbor.
I don't think I want an arrangement for the neighbor for my water unless I absolutely need it. So, we are in the process of contacting the city, trying to get the water, talking to the engineers, getting to the health department because someone might have to come inspect the land. But, uh, thank goodness we've got an expert in Septic.
Yes, you have to have experts in Septic, and evidently there's multiple of them in the area where I'm going. So, more stories to come, but it does mean that you have to save and be prepared for paying these people. But I'm happy to do it because I'm happy for someone to figure this out for me. I sure don't want to find the septic tank.
So I'm looking forward to continue to update you on that. That's the latest on the building and you just have to laugh and enjoy it and be really glad that you have a team that helps you make these calls and make things happen. So today you're going to be getting all up into the money and actually Nate has some really cool freebies that he talks about in the show and I can't wait to get the profitability dashboard.
Talk about each therapist and the profitability, so that's really exciting and he's going to get that to us as well. He's also going to be at the Wise Practice Summit. So if you hear the episode and you're like, Nate is awesome because he is, you should hang out with us at the Summit or Make sure you reach out to Navigator's bookkeeping, because they're great.
Today on the podcast, I have my friend, Nate Hendricks, who doesn't like math. However, he loves numbers and the stories they tell. He's the founder of Navigator Bookkeeping and is on a mission to help practice owners find their financial story. This means eliminating bookkeeping. Financial blind spots and partnering with owners while working with them to build profitable e brain practices.
So glad you're on the show today.
Yeah, thanks for having me, Whitney. Glad to be here.
Whitney Owens: Yeah, yeah, talking about money is always important. It is a common thing that we need to be talking about. In fact, I just recorded an episode, it's probably going to come out after this one, about blind spots and money and all that good stuff.
So this is going to be great. Before we get into the episode, though, can you share a little bit about yourself, just so people can get to know you, where you're located, anything you want to say?
Sure. Yeah. Yep. So I am Nate own navigator bookkeeping. Like you said, I live in Illinois suburbs of Chicago. So we live about 35 minutes from Chicago, but we really just never actually go to the Chicago side.
I think of myself as a very suburban person, but we love it here. Have two kids. My wife loved being outside hiking, things like that. And yeah, I started this business six years ago. Before that, I was a elementary school teacher, taught third grade for four years before that. Yeah. So it was a pretty odd career choice, right?
Career change. But I've always had a love for personal finance, for numbers. As you said in the bio, I actually don't love math, but I love numbers and the story they tell. So that kind of led to, to this career. And that was six years ago. And since then I've just been, been loving doing this and, and hanging out with a lot of practice owners.
Whitney Owens: Nice. All right. Now I want to hear the story about you starting the company.
Well, you know, teaching was what I did right out of school. And there's a lot of good things with that, you know, a lot of fun kid interactions, top third grade. So eight, nine year olds, but it was just a very stressful job to me, you know, keeping track of 28 year olds at once.
Was just like, so tense. I would come home every day. And my wife's like, Hey, how was your day? I was like, it was pretty terrible. And it was like that for, you know, every day for like two years. So, you know, pretty quickly in that situation, you're like, well, I can't do this long term. It's not good for me.
Good for my family. Good for the kids. Even though I'm teaching, like I'm just so stressed. So started looking around at other careers, brain about it, just kind of searching, like, what, what do I want to do next? And I've always had this love for finance. But I also wanted some flexibility because my wife's nurse, our schedules were all off and wonky.
So yeah, found some classes and courses to do on the accounting and bookkeeping and business side. Started taking those for the next two years while I was teaching, just kind of like knowing I'm going to grind out two more years of teaching and then start the business. So did, did four years of teaching, quit, started the business.
That was in June, you know, when school ended, didn't sign my first client until November. So I had a long stretch there where it just was me hanging out with no clients. I was loving life. I was like, this is great. My schedule is so flexible. I get to do stuff I love all day. My wife told me, you know, maybe a year later, she's like, yeah, I was actually pretty worried during that period of time.
Like, Hey, are you ever going to get a client? You know, like. How's it, how's it going here? I wasn't feeling that in the moment though. I was just confident and loving it. So eventually did get clients obviously, and then kind of scaled up the business from there, especially in the last two to three years from that point.
So yeah, kind of a, kind of a funny transition, but I think it really played into my passion for, for finance and numbers and allows me to do something talking to a lot of adults. I, you know, I love talking to kids, but it is nice to talk to adults all day. Kids. So that was a fun part of that transition as well.
Whitney Owens: Totally. Especially when you have kids, so you come home to kids. So the navigator bookkeeping, do y'all work with just private practice owners or do you work with people outside of that?
Nate Hendrikse: Yeah, we do. Now, you know, the first three or four years we're kind of working with whoever we had a couple of niches, you know, that we kind of tried out, but two or three years ago, we got referred a couple of private practices and loved, loved working with them and then really went specifically into that industry.
So the last two years, that's, that's, those are the only clients we've taken on. We turn away everyone else who comes our way, you know, we still have some of those older legacy clients cause they've been with us for a long time. We don't want to say goodbye to them, but all of our new clients coming in, you know, all the work that we do, all the new tools we put out, it's all about, about mental health and private practice.
Whitney Owens: Well, hey, we like that here. We want to be your favorites. Great. Okay. And so we're going to talk about financial stories today. And I love this concept for therapists because first of all, we didn't go learn about money in school. Yeah, we don't know what we're doing. But therapists also love stories. I mean, we ask our clients to share their stories all day long, but how often are we like taking the time to understand our own story, or maybe honestly, I don't want to look at my financial story, so therapists run away from it.
So could you, maybe first let's start out talking about what do you mean when you say financial story for a practice owner?
Yeah. Yeah. Financial story to me means, you know, everything that's happening financially in the business, but what it really means is pulling out of all those numbers and all that data and all those reports.
Why it's happening and how we can move and change that story to move the business, move the practice to a place we wanted to go, you know, I think one of the things in accounting that hurts accounting is that we can just kind of boil it down just to numbers and spreadsheets and it doesn't tell you kind of a narrative.
It just gives you metrics and colors and, you know, black, white. It's very stark. I think. You know, I personally love reading. I think maybe this is even coming from my teaching background in some ways, but I've always thought of numbers instead as what's the narrative we can pull out from that? Because I find that a lot more helpful than just looking at numbers on their own on a chart, right?
So what we try to do with clients is we try to come up with where was the practice in the past and how did that inform what's happening right now? Where are you right now and where do you want to go? You know, so you as the owner, where, what do you want the practice to look like? What do you want your life to look like?
Yeah. And combining all those things together and figuring out, okay, that now we know where we have been, we know where we're going, how do we look at the numbers and use those numbers to now make decisions in a way that helps make that goal a reality, right? So if you want to get out of the clinical work, let's start using the numbers to find a way to do that.
If you want to add new locations for multiple locations, let's figure out a way to do that, right? So if we're, if we're not looking at that kind of wider narrative, that wider context, in my mind, the numbers lose so much of their value and helpfulness. Because of the numbers need to work for you, right?
The numbers need to need to make sense for your goal, for the practice, your goal, for what your life is as far as work life balance, all those things. So the financial story is just a way of making sure that we're understanding the trends in the stories behind the numbers, instead of just looking at the numbers and just taking them just at face value only.
Whitney Owens: Yeah. Yeah. So I'm guessing a lot of people don't really do that. They just kind of look at them and they don't understand them. So curious. Are there some themes that you see for practice owners when you start kind of looking at those numbers and figuring things out? What are some of the trends that you see?
I
Nate Hendrikse: think that, you know, the biggest trend, the most high level trend is just practice owners not feeling confident in their numbers and in their financial story. You know, the, the biggest thing I hear when I'm talking to, to prospective clients is them feeling some sort of guilt or shame or just fear about their numbers, right?
Either because they don't have that financial story. Or because they've seen part of it. And now they're just like freaking out, like everyone else has it figured out and I don't write. And the reality that we know is most people don't have it figured out. Right. We're all kind of figuring out as we go as entrepreneurs, that's just part of the journey.
But I think we all have this kind of feeling in, in therapists, you know, practice centers, especially as well. I've just feeling like everyone else has it figured out, but maybe we don't. And we're kind of behind in some ways. So I think one of the most helpful things with finding your financial story is just starting to get some of that confidence back, knowing like, Even if it's a bad story, we at least know where it is and we can start to make moves to move in the right direction, right?
Because as you know, you know, therapy and mental health is, is an up and down industry. It's not like you're going to be out here and just making amazing margins right away. It's going to be some ups and downs, some roller coasters. So even if it's, uh, even if it's months that are a little bit tight, knowing what's going on and why it's going on can give so much confidence to owners.
And allow them to be like, okay, I can, I can not stress about that as much. And I can start focusing on what I'm going to do to, you know, move that financial story in the right direction. So I think that that confidence is probably that lack of confidence is probably the biggest story that we see. You know, we see a lot of uncertainty about taxes, things like that, even like, you know, just a lot of fear around tax time about like, man, taxes are coming up.
I don't know what to do about that. How do we start thinking about that? So even talking through some things like, Hey, let's just start setting some money aside. In the tax savings account month over month doing a little profit first light, you know, that, that can be so helpful just to get practice owners like, all right.
We have a plan. There's someone else looking at this with me. I'm not alone. You know, that can be a really helpful move because yeah, as entrepreneurs, you know, we, it can feel alone. Right. So us being able to come in, in partnership with somebody else and say, Hey, we're, we're here with you. Let's talk through this.
I think they just appreciate kind of that camaraderie and, you know, being able to bounce ideas off someone, things like that. So, you know, those are two common stories, kind of that. Not knowing what's going on, figuring out the confidence from that. And then, you know, there's, there's so many other stories that happen, whether that's, you know, struggling with cashflow, thinking through different pay structures and trying to figure out, Hey, how do I pay my clinicians?
How do I retain my clinicians? You know, we could go a million ways with that, but running a private practice is, is super hard, you know? So there's just a lot of stories that, that come up that we're happy to slowly work through and talk through. And there's a lot of great practice owners out there who just are looking for somebody to have some of those conversations with.
Whitney Owens: Mm hmm. Well, thank you for sharing this. You're bringing up so many important points. I mean, I think I'm just thinking at first how people are scared to even bring in a bookkeeper, right? And then they're like, Oh, I can't afford any help on this, right? But ultimately, by knowing your numbers, you're saving yourself so much, right?
I mean, I'm sure you see that with practice owners. Once they start working with you, they're actually making more. Yeah. Yeah.
Nate Hendrikse: Right. And I mean, there's, you know, there's even a lot you can do on your own as a practice owner, you know? Uh, so. We've, we've talked a couple of times on different things of, you know, here's some steps just to be taking on your own, just to start getting that financial story, you know, obviously I'm biased, you know, working with somebody like us can be really helpful in accelerating that process.
But even if you're just on your own, you know, if you're a solo practitioner, you're like, Hey, I'm just kind of starting out. How do I find this financial story? You know, there's a lot of things you can start to do, even just in, you know, 30, 45 minutes in a month. I'm just starting to figure out, all right, what, what do I need to look at just to find that financial story and start to move in the right direction?
So even starting to take some of those steps on your own can be really helpful. Like you said, just to make some more money from where you already are.
Whitney Owens: Arc integrated specializes in helping leaders navigate change, confidence, personalized coaching, leadership training, and strategic planning. Arc Integrated helps clients to reduce stress, enhance communication, and build emotional intelligence within their teams. Clients with Arc Integrated report results such as improved leadership skills, increased team cohesion, enhanced organizational performance, And increased retention of employees head to arc integrated.
com slash coaching to schedule a free leadership consultation. We'll have the chance to receive some tangible strategies to help you drive the success of your practice. That's arc integrated. com slash coaching.
Yeah. What are some of those steps that you're talking about? If somebody is kind of newer to the field?
Nate Hendrikse: Yeah. You know, just, first of all, Having some sort of accounting software is really helpful, right? So QuickBooks is the one most people use, but just having something where you're getting all the transactions, at least in there is great.
Even if you're not perfect at it, even if you're starting out, you're like, I don't know if this is office supplies or advertising, you know, that's, that's not a huge deal, just get the transactions in there, do, do the classify and get everything in there. But then just taking a quick glance at your reports, you know, I like to say, make sure you schedule, you know, just 30 minutes into your month to say, Hey, I'm just going to take a quick look at the profit and loss, see where we are.
Maybe take a quick look at some cashflow statement of cash flows, figure out what that's looking like. And then what I love to tell people is. Just record what you're seeing. So just have some sort of dashboard and just say, Hey, here's where my profit was in January, here's where it was in February, you know, look at your visits in a month, how was, how are my visits, how was my retention?
And just have a dashboard of some of those key metrics and just recording that and taking a look at it at that month over month can be so helpful in just getting that financial story. Even if you don't have every number memorized, every metric memorized. You at least are seeing generally where you are, things increasing, what's decreasing and the general kind of health of the practice.
Whitney Owens: Yeah, super helpful. I mean, if you don't have the numbers, you don't know anything.
Yeah.
Whitney Owens: And people will say all the time, Oh, I think it's this and this. I'm like, well, if you don't have data to back up what you just told me, I don't believe you.
Nate Hendrikse: Right. No, a hundred percent. Yeah. I mean, if you, if you don't have the data making decisions is so hard, right?
Like even if you're thinking about something as relatively, seemingly simple as should I hire someone? It's like, well, why do you want to hire someone? Is there data there, right? What, what does your capacity look like? What are your leads coming in look like? So having some sort of dashboard where you can just put those important metrics can be really, really nice.
And then, you know, when you get into more complicated decisions, like, Hey, now I have, now I've hired someone. How do I pay them? Thinking through pay structures. It's like, all right, now, now we can start to bring in some tools. Some other things like that to try to look at, you know, some of those more difficult decisions as far as how to pay people, how to incentivize employees, how to pay out bonuses.
But, you know, I like to say it's, it's, it's all in its right time. You don't want to try to get all the tools, all the support, everything right away. You know, when you're starting off, it's like, let's start small. Look at those reports, fill that dashboard. And then as you scale up, you can start to do those other things.
Maybe bring it, bring in a professional, maybe just bring in a tool that you're using, you know, we have a clinician profitability tool, which you can look at those pay structures, there's other tools like that out there, but just take a look at some of those pieces and then slowly just kind of increase your financial, uh, I guess resources and, and background to kind of keep growing with the practice.
It doesn't have to happen all at once.
Whitney Owens: Yeah. I mean, I'm just sitting here thinking about my own story and what it was like when I first started, he will be blown away. I've said this on the show before, but I did not want to pay for QuickBooks. I didn't really understand it. I didn't understand the benefits.
So I legit had my ledger in my checkbook when I first started my practice. Yeah. Wrote everything down, kept every receipt. And when it was time to do taxes, I did them myself. And sat down with all of it and got it figured out. I actually, I was in the child and family consumer sciences at the university of Georgia.
So I did take a class on taxes and how to fill out the form. So I knew something. Yeah, you knew
what you were doing. Yeah.
Whitney Owens: Yeah. For like the first two to three years. And then I was like, what am I doing? And then when I found QuickBooks, I was like, Oh man, like I have just wasted so much of my time and energy that could have been, this is so easy, you know?
Yeah. Yeah. Yeah. Anyway, and I ran my own numbers until I hit 8 therapists, did all my own bookkeeping and everything, and then finally I was like, this, I can't keep up, you know, and now I'm like, wow, like, it's hard to know what's going on without a dashboard. There's no way I would know what's going on without all that and having someone run all my books for me.
Nate Hendrikse: Yeah, I mean, that's, that's impressive. They did it for that long, to be honest, but yeah, I, we, we hear that sometimes, you know, I ha I had a prospective client I talked to who just was like, yeah, I just kind of liked to, you know, not do any bookkeeping until the last, like. Two weeks of the year that is kind of do it all at once.
And I just get it all done. And they're like, I kind of like that system. And I was like, I mean, what if you didn't have to do that though? Like that's Christmas that's holidays. So that's right. It's funny. You know, it's, it's one of those things where sometimes the system you have seems fine until you're like, Oh, it could be a lot more automated and a lot faster, you know, than maybe it is right now.
So yeah, that outsourcing can be, can be hard to do. I get that for sure.
Whitney Owens: Well, this is a common question I hear, and you kind of brought it up when therapists come and say, Hey, I'm thinking about hiring my first clinician, but I don't know if I can't, then it sounds like you've kind of thought through based on what you said, like some things that need to be in place before they do that, that, that I hear that, right.
Yeah.
Whitney Owens: Yeah. So can you kind of talk about that?
Nate Hendrikse: Yeah. You know, it's when a practice is scaling, right. Hiring that first clinician, in my mind, that's one of the most difficult Times in the life of the private practice. I mean, there's a lot of difficult times, right? I don't want to diminish anybody's time where they at, right, you know, where they are right now in the practice.
But when you're moving from a solo where your profit margins are amazing, you're probably like bringing in really good profit margin. You're like, this is great. This seems doable. And then you start to bring in a team and you have to, you know, manage the team, fill them up as far as their caseload, get enough leads coming in.
It gets really tough. I mean, cashflow wise, profitability wise, all those things, all of a sudden, just things are a lot tighter. You have a lot of adder says you're running payroll, you know, you might have workers comp insurance, all those things all of a sudden come in out of nowhere. So what I mean by that is, you know, when you're thinking about that hiring process, I think there's just a lot of kind of building blocks.
You want to make sure you have in place before you hire someone, you know, you want to have payroll ready to go. You want to make sure you understand what it means to hire someone. If they're going to be an employee, you know, state rules, state laws, all those things, I mean, a little bit of a different situation, but when I hired my first employee, I hired, I'm in Illinois, I hired her in Tennessee.
I didn't realize you had a, so Tennessee comes back to me a year later with a huge fine. Cause it's like, well, you never registered. It's like, well, I was paying payroll taxes, but you know, there's all those things that come up that when you're starting out and you're new, you just don't know they exist.
So yeah, when you're, when you're doing that scaling process, it's, it's good just to do a little research, maybe talk through some of those things with someone ahead of time, even just another business owner would be like, Hey, what am I not thinking about? What do I need to be making sure I'm doing? You know, what kind of checklist do I need to have to make sure that when I hire that some, that person, we're ready to go.
But the other thing that we see is, you know, a lot of practices will hire their first clinician at a really high rate, a really high pay rate, because they're like, I'm going to hire this person. They're going to stick around. I'm not going to lose them. You know, there's like, We're going to pay them 75 percent of revenue, you know, just crazy pay structures.
So the other thing that I always like to say is like, Hey, when you're, when you're about to hire that first clinician, it might make sense to run some numbers and just think about, you know, if this person brings in 10, 000 in revenue, how much are we going to keep? How much are they going to keep? You know, how much do I need them to bring in to be breaking even?
You know, just start to think through some of those structures, run some of those numbers right ahead of time. So that, you know, you're not three years down the road being like, man, everybody else is pretty profitable except that clinician I first hired, who is just kind of a drag now, you know, and we see that happen all the time.
And then, you know, you're not going to go in there and lower their pay. So they're just kind of hanging about getting a great. Hey structure, and you're kind of stuck with them in some ways. So just thinking through some of those numbers before you make that hire, I think it'd be really helpful as well as just making sure you have a, you know, a really strong pipeline as far as potential visits coming in, because I mean, you're, you're needing to double those, those visits all of a sudden.
Right. So that's a, another really difficult step up when that first hire happens.
Whitney Owens: Yeah, that that storyline you just said was like, right on point. I hear that all the time where they hire the 1st person. They pay him too much that constant. And I would say the practice centers that is. Space goes into this too, but that is 1 of the number 1 mistakes I see with group practice centers is pay their therapist too much.
And then they're burnt out and they're working so hard and they're going to see a lot of clients to keep up. And it's like, why did why did you even start a great practice? You know,
Nate Hendrikse: right? Right? Yeah, I've heard that so often, right? You know, practice center saying I made so much more when I was a solo than a group practice.
And they're kind of just like, I've been doing this for four years. Why am I still here? Exactly like you said, right? And yeah, it comes down to pay structures. A lot of the time it either comes down to pay structures or it comes down to, you know, not having a healthy enough pipeline of potential referrals and potential visits and clients coming in.
But that pay structure is one that you can at least figure out right from the beginning of, you know, Talk to some other practice centers, you know, talk to some other professionals and just figure out some options. It doesn't have to be set in stone where it's like, this is my pay structure for the rest of time, but just saying, okay, this is where we're going to start.
And, uh, you know, maybe we'll have some incentives in place to really keep that retention up, make our clinicians happy. I mean, we want to obviously pay well, but just figuring out some of that right off the start can be really helpful. So that, you know, like you said, three, three, four years down the road, you're not like, why did I do this?
I'm making such a small paycheck because yeah, pay switchers can be such a big, big part of that.
Whitney Owens: Totally. Totally. I love how we've kind of been walking through the process of growing a practice. We kind of talked about the first phases. I don't know if I naturally was doing that and kind of hiring, but now I actually, you mentioned this earlier and I'm interested in it.
The profitability dashboard, you said for therapists, is that right?
Nate Hendrikse: Yeah. Yeah. And this is a tool and, and I'll give you the link for this. You can share it with, with listeners, if they're interested in it. It's just a resource that we made that we found is really helpful. But it's basically a tool where you can see profitability by clinician, right?
So you could put in their revenue, put in their visits, put in their pay structure, and the calculator does the rest of it. And you can probably kind of see like, hey, what's our profit margin per clinician? Where does that kind of sit? Now, I'll just tell you and tell listeners, we ideally want clinicians to be around 20 percent profitability.
Per month, ideally, it's, it's possible. It's, it's can be difficult to pay on the pay structure, but it's possible. That's where we're shooting for. So when you put all your numbers in here, you can see like, oh, okay. Clinician a is at 25 percent profitability. Clinician B is at 5 percent Clinician C is at 45 percent What's going on here?
Why are these so different? So it's just helpful to see. It's another part of that financial story. Why is this happening? So it's less of a matter of like, okay, this is where it is. We're stuck with it, but more of a matter of, okay, now we know where it is. How do we edit things and tweak things? To make it so that we're more consistent so that this is fair, you know, if you have a clinician at 45 percent profitability, that might be telling you, you got to give themselves, give them a race, right?
You're, you're underpaying them, whereas if they're at 5%, you're maybe overpaying them or maybe capacity is an issue, but you can tease out a lot of those issues from a tool like this to figure out how to change pay structures, things like that. But it also helps you see visits at a glance by clinicians, see revenue at a glance by clinicians.
So you can get just a really nice quick view of kind of like the health of your clinicians as far as their capacity, retention, all those things. So it's helpful for, for a lot of those things. So yeah, you know, we were talking about new scaling practice. This is more, you know, as you're scaling up, as the practice is growing, as you're thinking about new pay structures, new hires, You know, thinking about a leadership team, that's a huge jump, right?
How am I going to pay that person? Am I going to lose money on them? Is that okay? All those pieces, we can use that tool to kind of forecast out, how is this going to look for the finances of the practice? So that you're going in with at least an idea. I mean, it's never going to be perfect, but you're at least then knowing.
All right, we can expect to be around this point. We know our clinical director is going to be about break even. Cool. We're good with that, you know, but just running some of those numbers is really helpful instead of kind of just being like, all right, we think this is okay, but we're not sure. So it's helpful to get some of that data in front of you.
Whitney Owens: Definitely. Well, that's really generous of you to share the spreadsheet. Now, I'm really looking forward to trying it out. So I love that you gave me a percentage. I actually love numbers too. That's how I made it to eight therapists running my, I like to know what's going on. So I love rules. Like you saying 20%, I'm like, thank you.
I know I want to know exactly what I'm shooting for. So I'm actually curious, what would you want to shoot for as a group practice profitability wise?
Nate Hendrikse: Yeah, you know, the size of the practice plays a big role there, whether they're private pay or insurance space plays a big role to give you like a really general number with which, which I could have a lot of strings attached to it.
But I'd say, you know, if we're shooting for every clinician to be around 20%, that means the practice should ideally be somewhere around there as well. Now, it's a, it's a pretty high mark, to be honest. Like I'm thinking about all of our practices that we, we work with. The majority are not there, you know, they're working towards that.
You know, somewhere in the teens is a lot more likely like 12%, 15 percent profit margin, and that's honestly a really good place to be, especially if you're a larger practice, if you're hitting like 12, 11, 13 percent profit margin, it's like, Hey, we're doing, we're doing pretty well. So, you know, being in the teens is nothing to be, nothing to sneeze at, but you know, I do, I do believe 20 percent is possible if everything's kind of in the right setup, but again, it's a lot easier in certain scenarios.
Um, just based on, you know, Hey, what's your average rate of reimbursement? The higher that is, you know, the easier it's going to be to get to that 20%, for example, right? So like a private pay practice may have an easier time getting there depending on the situation. But yeah, that's, that's generally the benchmark again.
Anyway, I like to say to our clients, and if you're in double digits of profitability, I'm pretty happy. Like if you're in 10 or above, I'm like, Hey, we're doing pretty well here. This is great. Like, can we keep making tweaks and getting better for sure? But 10 or above, like awesome. So. But yeah, that's, that's generally the mark.
I could give you a lot of disclaimers and other pieces, but we'll just keep it that simple. You know, 10 or above is great. 20 is, is outstanding. I don't see too many above 20 though. I have seen them, but those are more like unicorns of like, I don't know what you guys are doing over here, but you found some sort of crazy niche or, you know, something along those lines.
So
Whitney Owens: definitely, definitely. Well, that's a super helpful. Is there anything we haven't talked about that you want to make sure to mention just with therapists in general that you hear often or financial stories?
Nate Hendrikse: Yeah, you know, I think cashflow is, is probably the number one issue in private practice. I think it's the hardest thing to do as a private practice owner is to have consistently positive cashflow.
Profitability is like doable. You know, if you have good pay structures, you have good revenue referrals coming in, you can make profitability happen, but positive cashflow is so much harder. Because you have to pay yourself out of that, right? You're taking distributions out of that. You're wanting to set aside money for savings, emergency savings.
Like let's get that emergency fund set up. Tax savings, you know, all those things have to come out of the money that's generated by profit. So having consistently positive cashflow is really hard to do. So I just say to anyone listening, who's feeling tight on the cash flow side, like number one, that's super valid and very normal.
Keep fighting at it. And there's, there's a couple of different things you can do to, you know, to work on that, whether that's increasing your own sessions as the owner momentarily, not a long term solution, but a good short term solution. If you're in a cash fix, you know, changing those pay structures is another one, and then just trying to slowly chip away at setting money aside can be so helpful for long term cashflow, you know, so doing some sort of people have different feelings and profit first, but you know, whether it's profit first or whether you're just doing some sort of envelope system, you know, that's Slowly setting aside that money into a savings account and building up, you know, a month of expenses if you can.
So huge for kind of long term cashflow health. So that's, that's a great thing. A great goal to be shooting for is building that up so that, you know, when a July rolls around, which is a consistently tough month for private practices, it's like, okay, we can pull from those savings. We're going to be okay out here.
So I guess just generally to say, Hey, if you're fighting, if you're fighting on cashflow right now, keep working at it, start setting that money aside slowly. There's not like a, Unfortunately, golden bullet fix for cashflow. It just takes a lot of. Repeat profitability over time and being pretty disciplined with setting your money aside and and trying to pay yourself, you know, reasonably through distributions as well.
That can, which can be tough. Obviously, depend on what you have personally. So
Whitney Owens: definitely, I think what you're saying right there is so key. And as I'm watching my practice grow more and more, first of all, I realized that my job is really just managing money. Now, Cause that's the group practice center is the one that's managing the money and making sure it's used wisely to be able to grow the practice and care for the team.
But yeah, that, that importance of saving, because when something does happen, it's a bigger hit because you're used to making more money, you know? So we were just talking about hurricane Debbie. So in Savannah, almost every year we have to close down for three to four days, you know? So that's as a group practice, when I've got 15 therapists, 15 therapists not working.
That's a lot of clients not being seen for a couple of days. And virtual is not really an option because everyone's out of power. So, you know, I have to, now I've learned like, Hey, every fall, this is happening. You know, I need to be prepared for it. Um, just like you were saying, the July months and stuff like that.
And I just think as you grow as a group practice, it's even more and more important that you have more money set aside for these kind of issues.
Nate Hendrikse: And taxes play kind of a similar role. You know, we had a practice owner who was consistently just getting nailed by taxes every year. He'd have a great profitable year, but then he was drawing out all those profits to pay himself.
And which, which is great. I mean, I never want to tell you that the practice should not support you personally. It should, but he was drawing out all the profits. There was nothing left. And then tax time would come up. He'd have a huge tax bill and he'd just be in a huge, uh, Huge load of trouble, right? So he was just having this cycle where he was getting put on the payment plans, all these things.
So we started just slowly setting aside money into a tax account. You know, every month let's set aside 5 percent of revenue. Let's set aside 6 percent of revenue, whatever it was. And that first year when we rolled all the way around to tax time and he had more than was needed in that tax account for his tax bill.
Like his face, his expression was just so much relief, right? He's just like,
Whitney Owens: yeah,
Nate Hendrikse: I have money left over. Yeah, it was cool to see. So that can be such a huge move for a practice just to get out of kind of that cycle of owing on taxes. on, you know, struggling personally because of those taxes, having to pull from your personal funds.
The business can save those funds for you, pay those taxes for you. And it is such a game changer on both the business and the personal finance side. So that's a huge encouragement. I always give to practice owners is let's figure out a way to save for taxes inside of the business so that when you get to April, you know, the business can pay that you don't have to pull it from personal funds.
And it is such a fun feeling for them to be free of that. And then it just helps with cashflow a lot as well. So
Whitney Owens: 100 percent love it. All right. So if people are listening and they want to learn more about you, get in touch, working with you guys, what can they do?
Yeah. Our website is probably the best place.
So that's navigatorbookkeeping. us. So you can check that out. We have a YouTube channel as well. We talk about private practice finance. So you can look at some of our videos there. Just navigatorbookkeeping. You search that on YouTube, you'll find us. But you know, we, we exist to provide value to private practices.
So if there's anything you need, whether it's, you know, templates, tools. Just reach out. My email's on the website. I'm happy to share anything with you. Yeah, that tool, the clinician profitability tool, we'll put in the show notes here so anyone can, can access that. Hopefully that's super helpful. Um, the, on the profit, the profitability and the pay structure side.
And then, yeah, I think we're giving out some other offers through the, the wise community. We're giving out some, some free, we're calling them free tactical sessions. So 30 minutes just with me. If you have any questions on the financial side, We'll just talk about them, answer them and give you as much value as we can squeeze in in 30 minutes.
I think there's been a couple of schedules already, which I'm super excited about. So feel free to. Yeah. Yeah. So feel free to schedule that. If you're listening, if you just want to talk over anything financial, I'm here to help and happy to help. So.
Whitney Owens: Well, thank you. Thank you. Yes. And so that offer that you just gave us, we give that to our wise practice membership community.
So, if people are listening right now, and they're interested in that, you can go to last practice consulting, learn more about the community and yes, we do give free and great things to community members. So, and then you're going to be at the summit and by the time we record this, and this goes live, it'll be in a few weeks.
So, looking forward to seeing you there, and you'll be there to answer questions and help practice center. So. If you're going to be at the summit, please make sure to hang out with Nate and whoever he's with at the team and get information from them. So anyway, thank you for coming on the show and for all the gifts.
I look forward to diving into them and we appreciate your time.
Thanks Whitney. Thanks for having me. So
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