In Episode 84, Gerda is calling out three pieces of business advice that we as practice owners hear ALL the time:

Need more money? Just get more clients, right?
Can’t recruit? Just pay more, right?
Not making much profit? At least you’re breaking even, right?!

But…..what if these ‘solutions’ are actually what’s keeping you stuck?

In this episode, Gerda challenges these three pieces of advice that she believes are contributing to a cycle so many practice owners find themselves in, that is, being overworked, overwhelmed and underpaid.

In this episode, you will learn (among others):

• Why more clients won’t always fix your finances and what to look at first.
• Why paying more isn’t the answer to winning the talent war & what really drives retention.
• Why just breaking even isn’t a sustainable long term goal for a business.

Who this episode is for:

✔️ Practice owners who are busy, but still not seeing the financial results. 

✔️ Business owners struggling with recruitment, retention or team management. 

✔️ Practice owners who want to build a self-running and financially sustainable business.

Tune in for an honest conversation that might challenge some of the common sense advice you’ve been given and leave you thinking differently about what your practice actually needs to grow.

Here to help you build a practice you can’t stop smiling about 😊

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Well, hello there, brilliant private practice owner. My name is Gerda Muller, and you are listening to the Private Practice Success Podcast, and this is episode number 84.

Today I want to have, what I think might be a slightly uncomfortable conversation, about some of the business advice that we hear all the time within the allied health industry, and I want to talk about it because these three pieces of what I’m going to say is bad advice, they actually sound pretty sensible on the surface. 

When you start to unpack it, it’s actually not helpful at all. I actually believe that these are part of the reason why so many incredibly capable allied health practice owners who have built what looks like from the outside a really successful practice. They’ve got the beautiful rooms, they’ve got the clinicians, they’ve got the clients. Revenue might even look pretty impressive, but the owner is overworked, overwhelmed, and underpaid. Most of the time they don’t tell you that, right? That is hidden beneath the surface. These are practice owners, they are still seeing clients, not because they want to, but because you feel like you have to. This is you if you’re answering team questions all day long. You’re constantly checking the bank account to make sure you’ll be okay come payroll day. You’re working after the kids have gone to bed, and you keep thinking, “How on earth can we be this busy, and I still feel like I’m not getting ahead?” 

So today I want to call out and talk about these three pieces of really bad advice that are believed by many, and shared by many within our industry, but which I believe is actually keeping you and your business stuck. And more importantly, I’m going to share with you what I believe we should be doing instead. Because if your goal is to build what I refer to as a self-running practice, a practice that can run in your absence, that gives you financial freedom, time freedom, and energetic freedom. The freedom you so deserve and that you wanted when you started your practice, then we need to think very differently about how we are going to grow your practice. So let’s start with perhaps the biggest one.

Bad Advice No 1: Just See More Clients 

This is the advice you often get when the problem you have in your business is that you need more money, and then the solution offered to you is, ‘Just get more clients or just hire more clinicians who can see more clients.’ Easy, right? I hear this all the time. Revenue not where you want it to be, profit not where you want it to be. Cash flow is tight, you need more clients in the diary. Maybe I should even hire another clinician so that they can see more clients. And I understand why we think this way, it makes logical sense if I need more money, I need more revenue. If I need more revenue, I need more appointments. If I need more appointments, I may need more clinicians. So off we go. 

We spend more money on marketing. We try to get more referrals. We recruit another clinician. We may open up another room. Maybe the owner goes back to seeing more clinical clients herself, and voila, the revenue goes up. Wonderful.  Except, you may still be looking at the bank account three months later and think, “Where the hell is this magical money that all of this effort was meant to create?” Because unfortunately, more revenue does not automatically equal more profit. I really want you to hear this: More revenue does not automatically equal more profit. If your underlying business model isn’t working properly, irrespective of which of the three main business models out there you’re using, increasing your revenue can actually increase the problem you’re sitting with. And this is where I like to use my very simple, well-known leaky bucket analogy. 

So imagine I hand you a bucket with five holes in the bottom, and I tell you I need that bucket filled to the brim with water. What would you do? I honestly hope you wouldn’t just stand there and open up the tap and keep on pouring water into it. I hope you’ll tell me, “Gerda, this is freaking ridiculous. There’s bloody holes in this bucket.” Exactly right. You should say that. But this is what I see practice owners doing with their businesses all the time. The bucket is leaking. Their fees might not be right. Their margins might not be right. They might have significant age receivables. Their inactive client management might be poor, probably non-existent. And 9 out of 10 times, there’s inefficiencies sitting throughout the business, and instead of finding the leaks, we say, “Quick, pour more water in. More clients, more clinicians, more revenue,” and then we wonder why we’re exhausted.  

Because now, yes, I’ve got a bigger business, more people coming through the doors, which means more clients to look after, more team to manage, more admin, more compliance, more complexity, AKA more freaking chaos. And even if more revenue is coming through, you may potentially still have bugger all profit at the end of it.  So you haven’t solved the problem. You’ve just scaled the problem and this is something I unfortunately had to learn myself. There was a point in my own journey where my practice was fully booked, where we were very busy, and I remember sitting in my consulting room back in January of 2012 looking at the bank account and thinking, “How can we possibly be this busy and there’s no money in the bank account?” It made no freaking sense to me. Because I had bought into the exact same idea that busyness equals successful. That fully booked equals successful. That revenue equals successful. But it doesn’t. A busy practice can be financially an unhealthy practice. A seven-figure practice can be financially an unhealthy practice. 

You can have clinicians booked back-to-back and still have a business model that doesn’t work. And that’s why when somebody comes to me and says, “Gerda, I think I need more clients,” my first response isn’t necessarily, “Great, let’s get you more clients,” because I can definitely help them with that. No, I want to first look under the hood. That’s why when I start working with clients, I spend 90 minutes with them one-on-one looking under the hood of their business. I want to see where the money is already going? Where are the leaks? What are the margins? What are we charging? What are you paying? What work is being done that isn’t being billed? What money is owed to you that you haven’t collected? What happens when a client drops out of active treatment? What does the underlying business model actually look like? Because sometimes the money you think you need to go out and create is already sitting inside the business. 

In the Private Practice Success Academy, we have this saying that goes, “There’s always money in the banana stand.” If you know, you know. And that makes me think of one of my clients. I’m just going to use her initial, M and she’s a beautiful example of this. When she joined The Academy, she worked her way through my $30K extraction process. And in her specific situation, so there’s four strategies, and she only had to use this one strategy in order for her to extract way more than $30K. And what she did is we looked at her fee schedule, and when we did that, we discovered that her practice was significantly undercharging, which she didn’t realise, and she looked at the appointments already being attended, just current appointments in the diary. We worked through the calculations. We made some changes to her fees, and we calculated that those changes would result in approximately, and I’m actually rounding down here, would result in an extra $121,000 of additional revenue over the next 12 months – without seeing one additional client, without hiring any additional clinicians, without opening up another location, without trying to cram just more and more work into what was already being done. The opportunity was just there sitting. 

Now, I’m not saying you never need more clients. Of course not. Sometimes your diary genuinely does need filling. Sometimes recruitment genuinely is the next strategic move for your business, and sometimes growth is 100% absolutely the right answer. But I want you to stop assuming that it is the first answer. Because before you pour more water into the bucket, you need to look for the leaks. Because if the leaks are still there, more growth just means more chaos, and you’ll just feel more and more like a failure, like you don’t know what you’re doing, and that’s when you’re that freaking hamster wheel, right? That’s when you’re running around like a chook without a head. So I don’t want that to be your life as a practice owner. So we have to fix those freaking leaks. 

Bad Advice No 2: Just Pay More 

Very often this advice is given by practice owners from themselves to themselves, and this piece of advice is: just pay more. Now, this one generally pops up when practice owners are struggling with recruitment. So what do you tell yourself when you can’t get people over the line, when they aren’t applying or they’re not saying yes to your job offer? You’ve done the interview, and when you’re making the offer, they’ve gone, “No, I’ve already accepted a job elsewhere.” What do you tell yourself? What do people tell you? Very often it is that I just need to pay more. I just need to pay more than that practice down the road who’s also trying to hire right now. 

When this happens, we then suddenly find ourselves in this strange talent war that’s happening where practice owners are effectively trying to outbid one another in order to get the talent, which of course is the clinicians. Now, this is not happening overtly. This is happening covertly. And again, it’s my job here to point this out, to flag it, and to bring this into conscious awareness. This is my job as a business consultant within this space. I’ve seen people often wear this as a bit of a badge of honour. Tell me if you’ve seen this. And I see this across business models. This is not just employment, I see this across both employment, independent contracting, and services facilities where people might go, “Oh, my contractors get eighty percent of what they bill, not seventy like with other places, not just sixty, no, eighty.” Or, “My employees are paid way, way, way, way above award. We are the most competitive in the market.” 

Okay, am I meant to be impressed with that when back at the ranch your business isn’t actually profitable? Because I can offer somebody an absolutely spectacular salary, but that doesn’t mean that the business can afford it, and it certainly doesn’t mean that they will freaking stick around. This is where I think we need to separate two very important concepts here, recruitment and retention. I will be the first to say that freaking money matters. Of course it does. Your people, your clinicians, and I want to put in here your admin team, they deserve to be appropriately compensated, AKA paid for the work that they do. I am absolutely not suggesting, let’s be clear here, that you underpay your people. I’m not suggesting that. But if the only thing that makes your practice attractive is that you pay more than the practice down the road, then you have built your employee value proposition on something somebody else can beat tomorrow. 

When people start competing on this, it becomes a freaking race to the bottom of the barrel when it comes to your freaking profit. Because what happens when the practice down the road offers another $5,000 or another $10,000 on top of your offer? Do you increase your offer? And then they get another offer, and then you need to up that again, and again, and again, and at what point does your business model simply stop working, because here’s what I’ve seen happen personally – the practice owner is so desperate for clinicians because you believe that more clinicians will solve that revenue problem we just spoken about in bad advice number one. So you pay above what the business model can sustainably afford in order to get that person through the door, in order for them to say, “Yes, I’m going to come work for you.”  And now the margins are thinner, so the practice needs more revenue. So you need more clinicians, so you become even more desperate to recruit, and you pay more. 

Do you see this loop? And the thing is, that clinician might still leave because people do not stay in businesses purely because of money. They stay because of how it feels to work there. They stay because they know what’s expected of them. They have appropriate support. There’s good leadership. They feel valued. It’s a place where they can professionally grow. Yes, it’s also a place where there are boundaries, where there are systems, and there’s consistency, so they feel safe, and it’s a culture that they actually want to be a part of. 

So my philosophy on this is, you don’t win the talent war by paying the most. You win it by becoming the practice that great people don’t want to leave. So you have to play the long game here, and these two things are very different strategies. One is essentially, how much money do I have to offer to convince you to come here? Versus the other one says, how do I build such a bloody good place to work that the right people want to come here, and more importantly, they want to stay? And this is where leadership matters enormously. Because many allied health practice owners, including myself, we are accidental leaders. 

We didn’t get taught leadership back in uni. You became a psychologist like myself, or an OT, or a speech pathologist, or a physiotherapist, or insert whatever your allied health discipline is, because you wanted to help people. You wanted to help the clients coming through your doors. And then one day you look around you and you’re like, “There’s six people working for me.” And you think, “Holy crap, apparently now I’m a leader all of a sudden.” And because we’re helping professionals, many of us are really good at being kind. Being empathic comes naturally, so we are accommodating. We understand everybody’s circumstances, which is wonderful until that kindness quietly turns into… You, you know what I’m talking about, people pleasing. And now every policy has an exception. Every boundary is negotiable. Every KPI is more of a suggestion than a requirement. And everyone can interrupt you whenever they want because you don’t want them to feel unsupported. You know? You’ve got that 24/7 open door policy, and you start carrying everybody. 

I had a client, we’ll just say Kay, and she experienced this. She is an incredibly caring, service-orientated person, but her team, as a result of being who she was, was essentially running roughshod over her. People would stop her in the corridor wanting answers immediately, and she didn’t feel like she had the right to say, “Not now. Can we talk about this later?” So she really struggled to hold those boundaries. Yes, her policies existed, but she kept on making exceptions for people. and eventually she felt like she wasn’t even in charge of her own business, and it affected her enormously. When I started working with Kay, our work together wasn’t about making her work harder or growing a bigger business, and it also wasn’t that now you needed to stop being nice, quite the opposite. It was helping her to understand that I can be kind and still lead. I can say no. I can say not now, and I can have expectations of my team. I can have KPIs and expect people to meet it. I can hold somebody accountable. I can have an uncomfortable but necessary conversation, and none of that makes me a bad person. 

Do you know what happened? People did not leave. Her team actually started respecting her boundaries. And you know what else happened? Productivity improved. People started hitting their KPIs, and retention improved because good people actually like clarity. They want to know what success in their role looks like. They want to understand where they fit in. They want to trust that somebody, AKA you, the practice owner, is actually in charge of this business. So I want to be clear here. Yes, you absolutely must pay your people appropriately, but you have to simultaneously stop thinking that you can salary or outbid your way out of a leadership, culture, or retention problem. If you want to win the talent war, you have to build a practice so great that people don’t want to leave.

Bad Advice No 3: Just Break-Even 

All you need to do is just break even. And I think this one runs particularly deep within allied health, and it’s this idea that because you’re a helping professional, you shouldn’t really be making much money. And I see this particularly with psychologists because I’m a psychologist, and therefore the majority of the practice owners I work with are psychologists, and there can be this underlying discomfort around profit. It’s like, how can you make money from somebody else’s mental health problems? Shouldn’t you make your service cheaper? Shouldn’t you just bulk bill? Shouldn’t you be accessible to everybody? Shouldn’t you basically just cover your costs so that you can have that accessibility, and if there’s a tiny bit left over at the end of the day, well, lucky you. You need to be grateful to just break even. You should really be grateful for that one, two, three, four, even freaking five percent profit margin. At least you’re helping people. 

I want to call bullshit on all of that because breaking even is not a freaking flex. You are running a business, a real business. Well, I would hope so. You’ve got wages to pay, super. If you’ve got a brick-and-mortar location, you’ve got rent, subscriptions, insurance, compliance, admin wages, marketing, professional services, et cetera, et cetera. If you’ve ever looked at a group practice’s profit and loss statement, you’ll know exactly what I’m talking about. And somewhere in all of those expenses on your P&L, there’s still you, the person who took the risk to build the bloody business in the first place. 

So why is everybody else allowed to be paid except the business? Why does everybody else get looked after while profit gets whatever crumbs happen to be left over? And why have we somehow decided that being financially healthy and being ethical are two opposites. Because they’re not. You can care deeply about mental health and make a profit. You can provide excellent clinical care and make a profit. You can pay your clinicians and your admin team appropriately and make a profit. You can make services accessible where it is appropriate and sustainable for your business and still make a profit. 

Profit is not evidence that you don’t care. In fact, I would argue that a financially healthy practice can, and will very often, make a much bigger impact than the practice that’s constantly on the financial edge, constantly on that cliff just waiting for the next bill to push it over the edge. Because what happens when there is no margin? You have zero buffer. One clinician resigns, and you freaking panic. Referrals slow down, and you freaking panic. There’s an unexpected tax bill and you freaking panic. And of course, when that tax bill comes, it’s never your fault, it’s the accountant’s fault. And you need another admin person, but you can’t afford one, so you do the admin yourself. You desperately need time away from clinical work to lead the business, but the business cannot afford for you to stop seeing clients, so you just keep doing everything.  Sound familiar? Then we wonder why practice owners burn out. This isn’t sustainable healthcare, and it certainly isn’t a self-running practice. 

When I talk about a self-running practice, I’m talking about a practice that can run in your absence. It doesn’t need you standing in the middle and holding it all together. And financially, I believe that a mature self-running practice should be working towards a 30% profit margin. Now please hear me when I say this. I am not saying if your practice is currently making 4% profit margin, that you should wake up tomorrow and somehow make 30%. That is ridiculous. It takes work, and it will take time to get there, and there will probably be some significant changes required in your business model to achieve that. There’s going to be many leaks that we’re going to have to plug. There might be some pricing issues that we need to address, productivity issues, staffing issues, system issues, but you can most certainly start tomorrow to build towards that number. 

But what I do want to challenge you on is this idea that you should be satisfied with 3% simply because you’re an allied health professional. It’s like, why is that the ceiling? Who decided this, that this is all you deserve? Why are you not allowed to build something that’s financially strong like other business owners do? Why are you not allowed to create a proper business asset? Why are we not allowed to build something that has value without us? Because this last bit actually matters a lot because if you one day want to sell your practice, what exactly are you freaking selling? If the practice only works because you are there, and if the profit disappears the moment you step away, if all the client and referral relationship sits with you, if every decision comes through you, and if all the system sits in your head, what is the buyer actually buying? 

A self-running practice is very different. It has healthy margins. It has systems, proper leadership. It has people who know what they’re doing – people excluding you – and it can operate without the owner being involved in every decision, and that creates value, and these practices exist. That is what I’ve got, and I’ve seen this with many people I’ve worked with. 

The most recent case in point is, we’ll just call her Jay. When I started working with Jay, she had around 16 clinicians on her team. So from the outside, it looked like a really successful practice. But she said to me during her Kickstart Strategy Session, “Gerda, I know what we’re doing today is looking underneath the hood, and you’re going to find that everything is freaking duct-taped together.” She was constantly waiting for the moment that something was going to go wrong, and that she might lose everything as a result because the business was too dependent on her. So we opened up the hood, we worked on the business model, we properly operationalised it, and we installed self-running systems, and we reduce that dependency on her as the practice owner. Fast-forward three years, and she sold her practice for a life-changing amount of money. She can now pay off her home, and she now has choices. 

This is what I want for all practice owners. Profit isn’t just about having more money. It gives you options. It gives you the ability to choose what you want, how you want to invest, and gives you the ability to pay good people. It gives you the ability to step out of clinical work and spend time thinking strategically. It allows you to survive those difficult seasons in the business because you’ve built up a cash floor, so you can actually keep people in their jobs when times get tough. And ultimately, it helps you build an asset that has value that you can one day sell should you choose to do so. 

So no, I do not believe that you should feel guilty for wanting a profitable allied health practice, and I want you to make a healthy profit because I want you to keep doing the work. I want you to have a business that’s going to be here in five years’ time, in 10 years’ time. I want you to employ great clinicians. I want you to help more people. I want you to be able to improve the way you deliver care, and I want you to have a freaking life because you matter, too. And I think sometimes we forget that. We’re very comfortable as practice owners investing in our clients, supporting our team, and sacrificing things for our families. But somehow down the list, usually right near the bottom, that’s you. You’re sitting right on the bottom. And then one day you wake up, and you’re just exhausted and resentful, and you wonder why the business you built to give you flexibility and freedom has taken all of that away. That’s not success to me.  Do you agree, or am I just way off base here? 

Conclusion 

Alrighty, let’s summarise. Instead of buying into those three bad pieces of advice I’ve just taken you through, I want to invite you to consider my way of thinking when it comes to these three fundamental concepts within your business. 

The first one relates to your clients, and I want you to consider this. Before you chase more clients, I want you to plug the leaks in the ones you’ve already got.  The second one relates to your team, and I want you to consider this point of view, and that is that you don’t win the talent war by paying the most. Instead, you win by becoming the practice great people don’t want to leave.  Then finally, number three, this one has got to do with your frameworks, particularly your financial frameworks, and that is that breaking even is not a freaking flex. Your practice should be working towards achieving a profit margin of 30%, because ultimately, what I want for you is to build a practice you can’t stop smiling about. Not a perfect practice – because I can tell you now, as a practice owner still myself, there’s no such thing. People will still resign, clients will still cancel, things will still go wrong, and there will still be difficult conversations and unexpected problems. 

I want the foundation underneath your practice to be strong enough that those things don’t send the entire business into chaos or cause you to go into panic every time something happens. And therefore, I want you to have real profit in the bank. I want you to be able to pay yourself properly. I want you to have a team that doesn’t need you every five minutes. I want you to be able to take a holiday, and actually be on holiday. I want you to be able to sit with your kids without the constant voice in your head saying, “I should be working. I should be working. I should be working.” 

I want you to have a self-running practice, one that provides you with financial time and energetic freedom. I’m hoping that one of your takeaways from today is that you don’t create all of this that I want for you by constantly adding more. Sometimes the smartest growth strategy is to actually just pause for a minute, to look underneath the hood, to fix what’s already there, to plug the leaks and build the model properly.  Build the team, the systems, the frameworks properly, those are your foundations. Because as your business grows and gets bigger, your life should get better. And if today’s episode has made you slightly uncomfortable, good. I’d much rather make you think than simply tell you what everybody else is already telling you. 

So here’s what I’d love you to do. I want you to take the following three questions back with you into your practice this week. And I want you, when you sit down in the practice, ask yourself: Where am I chasing more instead of plugging a leak?” Just one thing, and then you focus on that.  Second question: am I trying to recruit people with money only, or have I genuinely built a practice that great people want to stay in?  Question number three: Have I unconsciously decided that making a healthy profit is somehow wrong or unethical just because I’m an allied health professional? 

Don’t rush to answer these questions. Have a proper think. Because your answer to these questions will tell you a lot about what your practice needs next, and a lot of the time, it’s not a new marketing campaign, and it’s not adding another clinician. Okay? Very importantly, remember that there’s no prizes or medals for doing this alone. Just like your clients come to you and your business for help and support, practice owners, you need help and support, and this is what I do. So reach out and let’s do it together. It’s so much easier, and I might even suggest fun, when you’ve got somebody in your corner helping you do this. 

Thank you so very much for tuning in, and as always, remember that I am here to help you build a practice you can’t stop smiling about 😊