There are several things to consider when we discuss how to increase your practice’s profitability. Your initial thought may be to head straight to your expenses, but you might be surprised where the real difference can be made. The first question to ask yourself is: does your overhead cost more than the revenue you’re bringing in? With that being said, here are a few tips on where you should start.
Tip #1- Increase your revenue
Revenue and profitability work hand in hand. When you increase your revenue, you should increase your profit. As a practice owner, it’s important to understand where your revenue is coming from and how you can generate more of it.
Revenue is simply the total earnings your company generates through sales. So, how can you increase your revenue? We like to say, by squeezing more juice from the fruit! Start by increasing your output of the services your patients know and love, and increasing the fees associated with those services. You might feel apprehensive about increasing your fees, but this actually filters out patients that do not drive your bottom line. Your ideal patients are most likely willing to pay a premium due to the value they see in the service and the experience.
Tip #2- Get That Next Dollar
Your “next dollar” is always your most profitable one! What do we mean by “next dollar”? Your next dollar is anything earned after you’ve paid your fixed costs for that month or year. The only cost associated with your next dollar is your cost of goods sold, such as your supplies, labs, and consumables. That next dollar goes straight to profit!
We recommend increasing your “next dollar” by simply increasing your production. Where can you save time elsewhere to allocate more time for your best-selling services? How optimized is your patient schedule? It’s being intentional about putting the focus on where you gain the most revenue and driving up that stream.
Tip #3 – Cut Expenses
Although this is something we prefer to avoid, cutting your expenses may be another option if you aren’t seeing an increase in profitability. If you’ve already increased your revenue, but want to see a more significant increase in profit, we recommend taking an internal look at where you can cut down on expenses. Here are some key cost areas to consider cutting back in.
- Suppliers. Are you receiving the best deal from your suppliers? Is there another supplier in the market that is more cost-effective?
- Premises. Is every square inch of your practice being utilized? Is there a more efficient way to structure your layout so you can implement new procedures or services?
- Production. Are all of your staff members booked up? Are your current services bringing in enough revenue? Are your high-selling services easily accessible to patients?
Making small changes over a period of time can drastically change your revenue streamline, ultimately allowing more profit for your practice.
Implementing these tips are more than likely to produce results, but it’s no easy task to do when you’re running a business. That’s why we’re here to help! Maven Financial Partners breaks down your numbers and provides real solutions on how to grow your practice profitability. We specialize in the aesthetic space, helping businesses turn their next dollar into their most profitable one. Contact us today to learn more!