In this episode of the Practice of Therapy Podcast, Nate emphasizes the importance of understanding your practice’s financial health, or “financial story,” to reduce stress and uncertainty. He highlights the common issue of relying on intuition instead of accurate data for financial decisions. Nate offers practical steps for therapists, who often lack financial training, to manage their finances confidently. He introduces a simple monthly process: reviewing profit and loss statements and cash flow reports to establish a financial baseline, analyzing clinician metrics for profitability, and creating a comprehensive dashboard to track key metrics. This approach helps practice owners transition from financial anxiety to a clear, data-driven understanding of their financial health, enabling better decision-making and planning.
Meet Nate Hendrikse, Profit First Professional, QuickBooks ProAdvisor
Nate Hendrikse does not like math, but he does love finance, accounting, and helping practice owners find their financial story. He is the owner and founder of Navigator Bookkeeping and spends most of his days speaking with private practice owners about their practice’s financial story. His favorite things are seeing practice owners move from cash flow stress to cash flow confidence, profitable practices, and tax savings accounts.
Mastering Your Financial Story: Nate’s Guide to Confident Practice Management
Nate emphasizes the importance of understanding the financial health of a practice, which he refers to as “your financial story.” He notes that many practice owners often rely on their intuition to make financial decisions, which can lead to uncertainty and stress. Nate advocates for using concrete financial data instead of gut feelings to make informed decisions. By having accurate and up-to-date financial information, practice owners can alleviate much of the anxiety surrounding their financial situation, whether it’s positive or negative. He acknowledges that many therapists did not receive financial training in their education, which is normal and acceptable. Nate aims to provide practical steps to help therapists manage their finances confidently without needing advanced financial degrees.
From Fear to Confidence: A Monthly Financial Review for Practice Owners
Nate underscores the tendency of business owners, including practice owners, to avoid looking at their finances when times are tight due to fear and dread. He recounts a recent meeting with a practice owner who was initially reluctant to review her numbers but felt relieved after realizing her financial situation was manageable. Nate’s goal for the podcast is to help listeners transition from financial anxiety to confidence by regularly reviewing their finances. He introduces a simple monthly process that involves spending about an hour reviewing key financial reports: the profit and loss statement and the statement of cash flows.
The profit and loss statement shows revenue, expenses, and profit or loss, helping owners identify trends and establish a financial baseline. The statement of cash flows details cash changes, including distributions and other non-operating cash movements, offering a fuller picture of financial health. Nate emphasizes that understanding these reports, even without deep analysis, can greatly enhance financial clarity and decision-making for practice owners.
Spotting Financial Red Flags: Using Regular Reviews to Catch Anomalies
Nate emphasizes the importance of regularly reviewing financial statements to detect anomalies early, similar to how warning lights on a dashboard indicate issues. He shares an example of a practice that consistently noticed a discrepancy between their EHR and QuickBooks revenue numbers. Upon investigation, they discovered that their bank was holding significant deposits, once holding $70,000 and another time over $100,000. This issue was only identified because they were regularly reviewing their financial data. Nate underscores that understanding the usual financial patterns of practice is crucial for identifying and resolving such issues, ultimately leading to smoother operations.
Master Your Practice’s Finances: A Three-Step Approach to Financial Clarity
Nate outlines a three-step approach for practice owners to comprehensively understand their financial health:
- Review Financial Reports: Spend 15-20 minutes each month reviewing the profit and loss statement and the statement of cash flows. This step provides an overview of revenue, expenses, and cash changes, helping to identify trends and establish a financial baseline for the practice.
- Analyze Clinician Metrics: Use tools to evaluate each clinician’s revenue, visits, and pay structure. This analysis helps determine clinician profitability and identify areas for improvement in pay structures or capacity. This step is crucial for making informed decisions about hiring, raises, and overall clinician performance.
- Create a Dashboard: Combine the data from the first two steps into a comprehensive dashboard to track key metrics over time. This dashboard can include profit, cash flow, visits, marketing activities, and clinician numbers. The goal is to have a mix of lead (proactive) and lag (reactive) measures to monitor both ongoing actions and their outcomes. This step helps in understanding historical trends and making informed decisions to improve financial performance, such as adjusting marketing efforts to mitigate seasonal revenue dips.
By following these steps, practice owners can move from a place of financial uncertainty to having a clear, data-driven understanding of their practice’s financial health, enabling better decision-making and planning.
Nate Hendrikse: Hey, I'm Nate Hendricks, and I'm happy to be on the practice of therapy podcast chatting about how to find your financial story.
Gordon Brewer: Well, hello everyone. And welcome again to the podcast. And so glad for you to get to know today, Nate Hendricks. Welcome Nate.
Nate Hendrikse: Thanks Gordon.
Thanks for having me.
Gordon Brewer: Yes. And Nate and I were just kind of I guess reminiscing a little bit before we started recording and just trying to remember how we met each other. And we both ran into each other at the meet you in Kentucky conference. And so Nate is. Is a pretty neat guy. And as a start with most everyone, Nate, why don't you tell folks a little bit more about yourself and how you've landed where you've landed?
Nate Hendrikse: Sure. Yeah. So I'm Nate. I own a practice called navigator bookkeeping live in suburbs of Chicago. So. We're not in Chicago. We're in the many, many suburbs of Chicago, which is nice. It's a good little mix of, you know, suburban, but also close to a lot of things or some, some nice nature out here as well.
Yeah, I started a practice practice about six years ago and then the last. Two to three years, we really niched down into mental health and into private practice. So started going to a couple of conferences. You mentioned meet you, Kentucky Gordon. And that was really, really fun going the first time.
This year was my second time. So I went last year and in 2023 for the first time, and just really fun to meet a lot of practice owners, meet a lot of other people who work in the, in the private practice sphere. And from then we've just been, been loving working with, with more and more practice owners again, for like the last two or three years.
And just. diving deep into the industry. So we get to work with practice owners all over the country, which is really fun. So I have a little map of my office. I just like to keep track of all the different states we get to work with practice owners. And I just love chatting with people in different parts of the country.
So it's, it's a fun part of the work that we do. So Yeah. But we're based in Illinois. I have a wife and two kids, so they, they keep me busy. Two little kids, two and four. So they're, they're crazy, but they're fun. I work from home. So, you know, that's sometimes a good, good choice. Sometimes it's not a good choice as far as getting interrupted, but it's all right.
Gordon Brewer: Yeah, yeah, it's fun. Yeah, that's a fun times having those little kids. So yeah. Yeah. So yeah. So I know one of the things that Nate and I were talking about before we started recording is, is just looking at your financial story, which I love the way that you frame that But people hear from me all the time.
You got to know your numbers. And I think really where your expertise comes in, Nate, is just really helping people figure out what their numbers are and how to look at them and how to understand it. So jump in here and just tell folks a little bit about your process and, and all of that.
Nate Hendrikse: Sure. And yeah, I'd love to hear from you too, Gordon.
If I know you have a lot of expertise and wisdom in the practice sphere. So any thoughts you have Interested to hear as well. But yeah, you know, I like calling it your financial story. And what I mean by that is when you're a practice owner, you're always kind of wondering, where are we financially?
What's going on? Right. You may have an accounting software like QuickBooks. You may not, it might be updated. It might not, but either way, you know, most practice owners I talk to are kind of always wondering about that question of, you know, where are we right now? Where, how were we doing last month? How are we doing right now?
And what does the future hold? You know, a lot of. The financial side of a practice can feel kind of a gut decision sometimes like, well, I feel like our checking accounts are high enough, or I feel like they're really low and you're kind of just making decisions based on what you feel is happening. So what we're trying to do and what I'm going to talk about with finding your financial story here is.
Instead of having to use your gut for those decisions, having real data that you can feel really confident in, which really allows a lot of the kind of stress on the financial side to be removed because then whether it's a great situation or a bad situation, either way, you at least know where you are and you can trust that.
And then make a plan going forward. So that's kind of the goal we're shooting for. And I, I, you know, I know I talked to a lot of therapists who say, you know, like, I never went to school for this or no one ever taught me this. So that's so true. You know, many therapists don't have a huge interest on the financial side.
And I think that's okay. There's no, there's no guilt or shame in that. You know, you went to school to care for people And do really great things in the community, not necessarily do the finance side. So hopefully this will be helpful in, in giving kind of a brief summary, a quick couple of steps so you can feel confident in that financial side without feeling like you need to, you know, go back to school and get your CPA or MBA or anything like that.
Gordon Brewer: Right, right. Yeah, it's a, yeah, I think, I think the fear and I, I, I'm this way too is, and I've, I've got a whole story I can tell about kind of a financial thing that I dealt with here recently. But a lot of times it's real easy to just kind of, as we say, bury our head in the sand. It's kind of like, I don't want to know, you know, I mean money's coming in, but, I, I just don't wanna know what's going on or fear that it's really bad or Right.
And a lot of times it might not be as bad as people think it is. Mm-Hmm. and and that sort of thing. But, yeah. So you, you wanna tell folks a little bit about kinda your process and how people can discover their financial story?
Nate Hendrikse: Sure. Yeah. And just going off your point there that you shared, I think it's so true about, you know, many business owners, not just practice owners, but business owners in general, when the, when the finances feel tight, it seems easier just not to look at it.
And I was just meeting with a, A practice owner, a couple of weeks ago where she came to the meeting, just saying, I just don't want to look at the numbers. I don't, I didn't even want to come to this meeting, you know, and she just had all these feelings of just like dread, really just worried. And then we looked through the numbers.
We talked through them for about 30, 40 minutes at the end. She's like, oh, it actually isn't that bad. Is it, you know, there's actually some, some small steps we can take, but we're actually in an okay place. I was like, yeah, it's, it's okay. So I think that in a nutshell sums up what I hope to see. This podcast can do for anyone listening is just to move you from a place of like that worry and not, not wanting to look at the numbers to be like, okay, let's just take a, take a quick couple of minutes, take a look at the numbers, and then we can just feel confident and know what we need to do next.
So hopefully that's helpful here. So, so this process I'm going to share is shared in a way that hopefully this is something that. You as practice owners, as you listen to this can take and do every month on your own without much outside input, right? Just an easy way to say, Hey, let's spend 45 minutes to an hour every month to look at our finances.
And after that, we can just. Be all good to go. We don't have to spend, you know, five hours. We don't have to dive into super crazy spreadsheets, just a couple of quick steps. So I'm going to share three steps with some sub steps, but three steps. And each of these three steps should take you about 15 to 20 minutes per month.
So if you kind of just block off one hour per month, I feel like you can at least get a really solid financial story to, to then make decisions off of, feel confident in things like that. So that's kind of where we'll, we'll shoot for. Okay. So first step is we want to review some financial reports. Now, financial reports feel scary, right?
If you're not used to them, they can feel really confusing when you're looking at them and that's super valid. But we're going to look at just two of those reports and we're just going to do that once a month. So the two reports are going to be the profit and loss by month. And then the statement of cash flows.
So we'll just talk through those here one by one. So the profit and loss by month, just to give you kind of an idea of what it, what it shows. And if you have any sort of accounting software, whether that's QuickBooks, zero, FreshBooks even if you just have a Microsoft, you know, Excel sheet where you're keeping track of your revenue and expenses, that's basically a profit and loss.
A profit loss is just going to show you all the money coming in and then all the money going out. And then what's left over and what's left over is either your profit or your loss. You know, that's, that's what the business is keeping or the, or what the business lost. So every month, it's really helpful to pull that.
If you're, if you're in QuickBooks, you're going to pull it profit and loss by month. And what that's going to show you is it's going to show you that revenue expenses and profit month by month in columns. And then you can kind of compare what's happening over that period of time. So where this is really helpful is you can start to see trends happening in the business.
So if your revenue last month was 20, 000 and this month, it's 14, 000. And then next month is 25, 000. It's like, well, what happened in the middle there? Why, why did we have that drop in revenue? And those are the conversations of things. I just want you to be start thinking about is. Just notice those trends.
Why did that happen? Maybe we need to investigate that a little bit, right? As well as just getting a sense for what's normal and what's not. So when you're thinking about your expenses, thinking about, about how much are we spending per month and what does that look like? For most practices, this number will, will definitely fluctuate quite a bit per month, but we at least want to have kind of an average.
Are we usually spending 5, 000 a month or are we usually spending 50, 000 a month? What's normal for us and how can we plan based on that? So, You don't need, need to do some sort of, you know, intense analysis of that. Just look for trends, look for what's normal and what's not, and just get kind of that baseline of, of activity in the business.
And that's what a profit and loss does. It just tells you. Where are you right now? Where's your activity? And it's, it's really helpful to look at it for a period of time. You know, we're in July right now as we record this July for most practices is their worst month of the year as far as revenue goes with vacation and everything like that. So if you just look at July, you might be like, man, our practice is really struggling. But if you look at the last six months, you might be like, Oh, we actually were doing pretty good. And then we just had a low July and that's normal, right? So even just giving you that context can be a really helpful piece as far as that profit and loss goes.
So that's the first report. Again, just take a quick glance on it, you know, keep track of it, see where things are. The second one is a statement of cash flows. This one's a little bit. Less common as far as not too many people look at this, but this is going to show you how your cash changed. So basically it's going to show you the cash that came in from the profit.
It's going to show you cash that went out from maybe paying yourself from paying taxes, from paying off a loan that you have. And this is really helpful because a lot of those things don't actually show up on the profit and loss. So if you don't look at this report. You might miss some of those pieces.
For example, if you paid yourself a big distribution, that distribution isn't going to show up on the profit and loss. So if you look at the statement of cash flows and the profit loss, you'll see that if you look at just the profit loss, you won't see that. So it gives you really both sides of the coin as far as seeing the full performance of the business.
Again, you can look at this by month if you want to kind of see what's normal, what's not. We see a lot of practices that are taking kind of rollercoaster distributions as I call them, right? One month might be 2000, the next month might be 12, 000. And for cashflow, it's just really, really tough because you're like, why did cash feel so different this month compared to this month?
It's like, well, distributions were very different, right? The money that you took out was very different. So this can be really, really helpful in just kind of seeing those numbers and getting, getting a good grip on that. But yeah, for both these reports again, the thing that I want to stress is don't feel like you need to analyze these.
You know, there's, there's many ratios and benchmarks that I can share with you, but at this point I just say, just take a look at them and just get a sense for, for what's normal for your practice and what's not. And then from that point, then you can start to layer in other things like where our other practices are size usually, or where should we be or where are our goals.
But at this point, let's just get a sense of where are we right now and what's normal and what's not. And then you can make a lot of decisions even based off that.
Gordon Brewer: Right, right. Yeah. And I think that I think the important that you bring out Nate is the, the idea of just kind of just keeping a pulse on it.
You don't necessarily have to do a deep dive every time you look at it. But there are times that I think I agree you, you need to do a deep dive, but I'll, I'll share a quick story here that I think maybe a lot of people can relate to back back earlier this year for, for those practices that have, that are insurance based, there was a big data breach with change health care clearinghouse.
And so, What that did is that affected, like you mentioned, the cash flow. In other words, money wasn't coming in like it was supposed to, even though we were still seeing the same number of clients. And so what's happening here. And so by looking at. Just simply looking at, you know, your cash flow or your profit and loss, you catch that and say, okay, what do I need to do to pivot to manage that?
Well, the other, other thing that happened during that period for, for, for my practice, Was when they changed the clearinghouse, I noticed that just in general, what we were collecting didn't match up in our, our, our electronic health records system therapy notes. There was a lot of money missing in therapy notes.
And so we were thinking, Oh crap, we're not collecting our money. But the truth of the matter is, is that because of the change healthcare thing, things, and because they changed the clearing house, things weren't hosting in there like they should have been. So it was just simply a bookkeeping problem, not necessarily an actual cash burn.
So, I mean, those are, but it also made us realize that we had been leaving a lot of money on the table in terms of we weren't. Following up with our collections like we should have with you know, particularly client, you know, maybe claims that were being rejected, that kind of thing. So it caused us to change the way that we did our systems and processes quite a bit.
Nate Hendrikse: Yeah, that's a great, great point. And, and yeah, looking at those statements can just give you that kind of warning indicator light, almost like on a dashboard that just something isn't right, right, but you need to know where things usually are to be able to see that warning light come up. We had a practice we work with who had a similar situation in some ways.
They, they noticed that their EHR was showing much higher revenue numbers than QuickBooks was showing just consistently. Like we'd, we'd look at every month. We'd say. Why is there such a big gulf here? You know, here and there, if that happens, that's normal, just when a deposit hits the bank, but they consistently had it.
And they, they went to their bank eventually, and they found that their bank was holding up a bunch of their deposits and just holding onto them. So they had the first time this happened twice, the first time, 70, 000 in deposits that the bank was just holding onto, not sending to them. Oh, wow. And the second time it was, it was over a hundred thousand and it was like, wow, how would we ever have noticed that if we weren't looking at the numbers?
Right. So, Again, just finding that financial story comes down to knowing just where you have been and what's normal. And once you know that, then you can really get into finding anything that's not working well, like you said, Gordon, and in changing a process or changing a system to make sure that it starts working more smoothly.
Gordon Brewer: No, right, right. Yeah, that's that's wild about a bank holding deposits. I don't know if that's a common practice, but I hope
Nate Hendrikse: not.
Gordon Brewer: Yeah. Yeah. Hope maybe they consider changing banks, whoever they are. Yeah, that's right. Yeah. So, yeah. So say more about just kind of your the financial story and looking at what are what are some other things we need to be paying attention to?
Nate Hendrikse: Yeah. Yeah. So that's the first one is, is review those two financial reports that should take, you know, 15 to 20 minutes per month. Just a quick glance. The second, second piece here is utilizing some outside tools. If you can to start to get a deeper idea of how the practice profitability and what the financial story looks like.
So there's, there's a lot of different tools that we could put here. I'm going to talk about, you know, two possible ones. There's a tool that we have, which, which many other practices have some version of, but it's called a clinician profitability tool. And if anyone listening to this would like a copy of that, I'm very happy to share it.
But basically what it does is we look at each clinician. We look at their revenue, their visits, and we look at their pay structure and we figure out how profitable are each of these clinicians based on how much revenue they're bringing in based on how they're paid, right? Whether it's a commission split, an hourly, a salary, whatever it is.
We can look at all those clinicians kind of lined up and see how different pay structures work. But for many practices, this is a really helpful tool to figure out. All right, we might be paying this clinician 55 percent of revenue, but once we include taxes, benefits, like if they're a W 2 employee, What does that cost actually look like?
Right. So looking at kind of the, that full cost and how that, how that looks. So this tool can be a really helpful deep dive into, all right, how are all of our clinicians doing? How profitable are they? And who do we maybe need to have a conversation with to say like, Hey, Can we open up your schedule a little bit more just to open up that capacity to get you to a higher space, or, you know, if someone's at a pay structure, that's really kind of pulling the practice down that tells us then, all right, the next clinician I'm going to hire, we're going to change that pay structure a little bit so that we can get to a little bit of a better profit margin.
So a tool like that is very helpful. Our tool is not the only one that does that, but I'm happy to share that for free. If anyone needs a tool like that, it is, it is very helpful to see. So that's the first thing is to look at that clinician data. Basically you just enter in revenue visits and the pay structure, and then the tool can do the rest of it for you every month.
And you can get a good idea of, of about where every clinician is. We ideally want every clinician to be around 20 percent profit margin per month. That's kind of the goal. If someone's super part time, that may not be possible and that's fine. But for a full time clinician, 20 percent is usually quite doable.
If it's not, if they're way below that, then that tells us. The pay structure may need to change or the revenue that they're bringing in may need to change, right? They maybe need to up their, their capacity, their visits. So doing a quick 15 minute glance at this tool every month can be really helpful in, in figuring out some of those things, how are our pay structures?
How, how are our revenue per clinician? How are our visits per clinician? And how profitable is each one of these people and then planning for the future as well with new hires, giving people a raise, all those things, this tool can be used for that as well. So looking at that data in some ways is really integral to figuring out that clinician side of the financial story, right?
Our first step is more like practice wide. How are things going? This step is diving into the clinicians and saying, How are clinicians doing? If you're a solo practitioner, you may not need a tool like this, right? You may just have, Hey, how am I doing? But still looking at yourself as a solo practitioners is helpful.
Just to say, how many visits did I have this month? Is that normal? Is that not normal? And what did my revenue look like as well from them? So that's the first piece. The second piece would be, you know, wanting to take a little bit of a deeper dive into things like Your retention by clinician, your churn by clinician, some of those more intense metrics.
Now there's a vendor at meet you in Kentucky called practice vital, which can, as a tool that shows some of those things, so you could work with someone like them to get some of those details, but you also could use your EHR and find some of those, those metrics as well. As far as, Hey, for each clinician, how long are they keeping a new client when they come in?
Is it five visits? Is it seven visits? Is it eight visits? And that's going to change your numbers quite a bit as well. So again, these steps might feel a little bit more intense if you're someone who's like DIY, like, Hey, I feel like I can pull that on my HR. No problem. Definitely do that. If you feel like you need to use a tool, there's tools out there, like I mentioned, or others that you can, you can use as well to pull out that data and find that in kind of a nice dashboard, have it all ready to go for you.
But if you're looking again at those two pieces. Revenue and visits by clinician as far as profit revenue visits, the dollar amounts. And then on the other side, kind of those softer metrics like retention, churn capacity. If you're looking at both sides of that, you're going to have a really good view of how full are your clinicians and who do we need to put that arm around and encourage?
And who do we need to say, Hey, you're doing really great. Let's give you an incentive or a bonus. Cause you're really killing it month after month. Just to give a view of like Each clinician specifically. So again, you know, once you get a process down, I think this could take you 15 to 20 minutes per month, just to give a quick glance on it.
You could even have, you know, someone on your admin team, if you have an admin team, fill out some of these tools for you, and then you could just take a quick glance at them. So as you're not taking up, you know, hours of your time doing this every month.
Gordon Brewer: Right, right. Yeah. You know, one of the things you, you mentioned there, Nate, that I think is, is something to pay attention to is it, is the retention rate with.
with, with therapists, because if, if a therapist has, if you're have a therapist that's working with you and their retention rate is low, that's a, that's a good flag for or an indicator of some clinical skill problems that might be causing that. In other words, people are working with that clinician for a short period of time and then they're changing to someone else could tell you, okay, this.
clinician might need to work on their engagement skills, their retention, you know, that, that sort of thing. And so I know I had that experience with a it was actually an intern or a person, it was a student that was doing their practicum with us. And that particular person had you know, clients were coming for a couple of sessions and then either canceling or, you know, going somewhere else.
And it really came down to just the lack of clinical skills that they needed. So again, those are, are important metrics to look at with your, with your clinicians.
Nate Hendrikse: Yeah. And I love that example because, you know, me being kind of the numbers guy, I don't see that side of it, right. As far as the clinical skills, but I love that because that's the tactical.
Action step you can take with these numbers, right? It's not just kind of a like pie in the sky number of like, Oh, our retention is not as good as we want it to be. It's like, no, that clinician's retention isn't as good as we want it to be. So let's have. You know more experienced clinician or, you know, clinical director, someone come help train up that clinician and improve their skills.
So I love that. It's like, if this number is low, we then have a action to do to help increase that number. It's not like a number that's just going to be stuck there forever. It's like, no, we can take steps to move this and increase this and not only increase the quality of the service of the care, but also increase this metric that we're looking at.
So that's fun to see when you can take those actual action steps there.
Gordon Brewer: Yeah, sure. Sure. So what are some other things that we need to pay attention to?
Nate Hendrikse: Yeah. Yeah. So the third one here, so the first one is kind of practice wide, right? Those financial reports. Second one is specifically by clinician looking at those clinician metrics.
The third piece is here is basically, how do we put those all together? To get a view of the full financial health and the full financial story of the practice. So I don't know if you know, Brent Stutzman, Gordon, but okay, you do. Okay, cool. Brent, Brent was a speaker at Michigan Kentucky. I ran a conference with him in Illinois called the group practice scaling summit, but at that conference, Brent talked all about dashboards.
That was his whole session. And I loved that because dashboards are the way that we keep track of all of our metrics in one place. Mike Michalowicz, who's the author of Prophet First, also wrote a lot of other books. In Clockwork, one of his books, he talks about dashboards as far as, can we create a dashboard that shows us all of our important metrics that we just keep track of?
And it doesn't need to be a lot of them. Maybe it's five, six metrics, but looking at those every month. allow us to know the financial story of the business, right? So, so this third step is really putting it all together. Let's do those first two steps. And then let's take the data from those steps and put them into a dashboard and a dashboard doesn't have to be some fancy, you know Google looker studio situation.
It can just be a very simple spreadsheet where you just type numbers in. But let's take a dashboard and let's take those important metrics and put them in there so that we can easily see, okay, where was January? Where was February? Where was March? How are we doing? Right. So I'll give you a couple of examples of some things you could put in that dashboard, but really the dashboard should be personalized to you as a practice owner.
It should be the things that you think are most important. So a couple options would be your profit. So your dollar amount of profit could be your cash flow. So how much cash came or went in the business. It could be the amount of visits. That you had in a practice, in the practice. It could even be marketing things, right?
So it could be how many networking meetings did I have or how many new referral sources did I create? It could be how many newsletter subscribers did I have or how did that change? Right. If you're putting out content like blog posts or YouTube videos, how many of those were included? You could do how many clinicians do we have in the practice?
You know, there's, there's a lot of things you could put there, but I would say either way, you want a mix of lead and leg measures in there, right? Lead measures being, you know things that you're, you're doing an action and then it's going to lead to a result down the road. A leg measure being something that you're measuring that already happened, right?
So profit cashflow visits, those are all leg measures, things that we took an action and then it happened and we don't have control over that anymore for that month. It already happened. The numbers there, a lead measure is something that we're doing now. To hopefully create a result down the road. So I do a mix of lead and leg measures.
So you can kind of say where, what are we being proactive in and what are we just measuring reactively to see where everything is? So putting that dashboard together is combining these steps of saying, okay, we, we looked at the reports, we analyze our clinicians. Now we're just tracking it to see historically through the year, through multiple years, what are the trends happening?
And, you know, you can even start to think what led to a strong month for us. What led to a week month for us? So, you know, I mentioned July before, if we look at July and we see that profits down, cash flows down, visits are down, say, okay, well, that happened last July happened to the July before we can kind of plan on that in the future.
Right. What that also tells us is that in, you know, March, April, May, we should be really pushing the marketing to see if we can try to boost that up over the summer so we don't hit such a low point. It's probably still gonna be low, but a less low point so that it doesn't turn into kind of like a cash flow emergency or anything like that.
So you really can turn it into a decision making process based on that dashboard, which is, which is a really fun piece.
Gordon Brewer: Yeah. Yeah, it is. Yeah. You mentioned Brent. It's Brent's probably going to be, is going to be on the podcast, I think in a later, later episode, but Brent has a company and I'll shout out to Brent here with this called Therasas and they, they, Have a a CRM does say I always get the letters reversed or some CRM customer.
So Yeah, yeah. And so we started using that in our practice and so it's made a made a difference. And just really kind of understanding, you know, where the money is coming from as much as anything and understanding that. And I think it's that's such an important metric for people to pay attention to is, you know, where are your and then.
It really hits on the two. One of the couple of things that we talked about is number one, knowing where our clients are coming from, but number two, how long are we keeping them? And what's, what's happening with all of that? So, yeah. Yeah.
Nate Hendrikse: Yeah. Retention would be a great one to put in that dashboard. Your churn rate would be a great one, you know, so you can really make that dashboard as personalized to you as possible.
I use a dashboard myself for my practice and. It's, it's one of my favorite, this is probably just cause I'm a numbers person, so this is going to sound nerdy maybe, but I love filling out my dashboard every month cause it just gives the month like a nice closure, right? It's like, okay, we know how the month was take a quick look at where the other months were.
And it's, it's like a five minute, 10 minute process, you know, it does not take long. So again, with, with all these steps, I'm trying to keep your total financial time under an hour every month to make it doable because the biggest mistake you can make, like you mentioned at the beginning, Gordon is just not doing it.
Just sticking your head in the sand and not looking at it. So if, if we can have a system where you're spending about an hour every month. doing these three steps, you're going to have a really good picture of your financial story. And you're going to be able to start making those decisions to move that financial story to the place you want it to go to a place of more profitability, more financial health, more cash, all those things.
So hopefully this is, this is digestible and usable in a way that someone who's, who's maybe worried about that financial side can say, okay, I can at least start taking these small steps. And then we can build on it from there.
Gordon Brewer: All right. Right. Well, this is great. Well, Nate, I've got to be respectful of your time.
Tell folks how they can get in touch with you and about your, your, your services and that sort of thing.
Nate Hendrikse: Cool. Yeah. Yeah. We, we love chatting about all things, private practice finance. So you can go to our websites, navigator, bookkeeping. us. We also have a YouTube channel navigator bookkeeping, where we talk about all things, private practice finance.
But yeah, check out our blog, YouTube, if you're looking for any questions we also do, you know, free fit or discovery calls. If you're just like, Hey, I'm just, I'm just curious about how things work, you know, feel free to chat you know, feel free to schedule and we can chat from there. And then, like I mentioned, you know, if you're looking for that clinician profitability tool, I'm very happy to share that as well.
So you can Use my email for that. And Gordon, we could maybe put a link in the show notes with that email, but you can email me at Nate at navigator bookkeeping. us. Just say, Hey, can I have that clinician profitability tool? And I'd be happy to, to send it over for you to use, but. I'll also be at the, the wise practice summit, which is coming up in October.
Yes. Yes. And I'll be there as
Gordon Brewer: well. Yeah.
Nate Hendrikse: Awesome. Yeah. So, so if any of your listeners are going to be there, we can chat in person. It'd be fun to, to be in North Carolina then as well.
Gordon Brewer: Yeah. Are you going to be presenting at the conference this year?
Nate Hendrikse: No, I'm not presenting. I'll have a table. So we'll
Gordon Brewer: I'll just be watching all the,
Nate Hendrikse: all the other great presentations and we'll have lots of, Lots of snacks to give away.
I'm sure. So,
Gordon Brewer: oh, sure, sure. That's always the fun part. Well, that to me, that's the, that's, that's the, the big piece for me with going to conferences and just meeting folks and networking and having conversations I'm, I'm presenting this year there. So I'll be there and I'll see you there
Nate Hendrikse: for sure.
That's awesome.
Gordon Brewer: Yeah. Good. Well, we'll have links in the show, show notes in the show summary for people to get in touch with Nate and Nate's a good guy, so check him out and check out his things at navigating Bookkeeping. Navi Navigator Bookkeeping. Correct.
Nate Hendrikse: You got it? Yeah.
Gordon Brewer: Okay. Alright, take care folks.
Nate Hendrikse: Thanks Gordon.
Being transparent… Some of the resources below use affiliate links which simply means we receive a commission if you purchase using the links, at no extra cost to you. Thanks for using the links!
Nate Hendrikse’s Resources
Free Clinician Profitability Session – 45 Minutes with Nate to do a deep dive on how you pay your clinicians, whether your pay structures are profitable, and whether the different locations of your practice are profitable
Clinician Profitability Tool
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Gordon is the person behind The Practice of Therapy Podcast & Blog. He is also President and Founder of Kingsport Counseling Associates, PLLC. He is a therapist, consultant, business mentor, trainer, and writer. PLEASE Subscribe to The Practice of Therapy Podcast wherever you listen to it. Follow us on Instagram @practiceoftherapy, and “Like” us on Facebook.