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All right, y’all. Welcome to a year-end review series. I did a similar series last year and it was quite popular, so I’m going to do so again. This year’s year-end review series is meant to help you look back on the last year of practice and use those insights to shape the coming year. The episodes are going to be short and [00:01:00] succinct because Lord knows we are all strapped for time at this point of the year.
Getting to today’s episode, we’re going to talk about numbers. How did you end the year in terms of gross revenue and profit? Any surprises? Any hopes for the following year?
Let’s dig in.
All right. As far as numbers, we’re going to keep this short and simple. I’ve done quite a few episodes on finances over the last several months, so I’m not going to repeat that content necessarily. You can certainly go back and check those out. If you just do a search on The Testing Psychologist website for finances or numbers, you should pull up many episodes, but this is just meant as a touchpoint for you to look back and do another check of [00:02:00] your numbers.
The main things that you want to look at are revenue and profit. I absolutely subscribe to the idea of what gets measured gets managed. Maybe you’ve heard that phrase before. And the idea behind that is that whatever you look at, whatever you pay attention to, whatever you quantify is the thing that you are going to put your energy into.
So, looking back on revenue and profit, these are two pretty important numbers in your practice. Gross revenue- the amount that you brought in right off without any expenses or anything. It’s just the money that gets deposited into your bank account, and profit, of course, is whatever you have left over after you’ve paid all of your expenses.
If you don’t have a bookkeeper, this is going to be a little bit more challenging. In that case, you may need to gather some documents, some credit card statements. You want to look at your bank [00:03:00] statements. Basically, you need to find out the total amount that you brought in over the course of the year and the total amount that you spent.
If you have a separate business bank account and business credit card, this can be very easy. If you have a bookkeeper, it’s going to be even easier because they should provide you with a year-end report. And if you don’t have either of those things, it’s a nice time to think about taking action on one of those things for the next year. I would encourage a bookkeeper-just makes things so much easier.
Once you have a good idea of your revenue and profit, let’s talk about goals and think about goals for the following year.
If you want to make more money next year, don’t just say, I want to make more money next year. Let’s actually quantify it and then let’s walk it back to figure out what you would actually have to do to make that money.
So if you want to earn, let’s just say $50,000 more next year, that sounds great. I don’t know how [00:04:00] that will compare to your current income. Maybe that’s 100%. Maybe that’s a 25% increase. But either way, if you want to earn $50,000 more next year, that’s anywhere from 250 to 500 more billed hours over the course of the year. So that breaks down to about 5 to 10 more hours a week. That’s one way to look at it. You would need to book 5 to 10 more clinical hours per week to earn $50,000 more.
Why is it 5 to 10? Well, because I use a range of a rate of 100 to $200 an hour. So if you’re billing $200 an hour, that’s 5 hours a week. If you are billing $100 an hour, it’s more like 10 hours a week. So you want to earn $50,000 more, break it down to how many hours per year that would come out to, and then break that down to how many hours per week that would be.[00:05:00] The alternative is you could raise your rates. So instead of working more, you can raise your rates. You would just need to divide your increased income by the number of evaluations you do per year. Let’s say you do 50 evaluations a year. You do one per week. If you want to earn $50,000 more, that means you would need to increase your rate by $1000 per evaluation. That’s a lot. That’s a big jump for most of us. So you may need to lower your income goal or maybe you do more evaluations, which gets us back to working more.
So there are many ways to twist this, but the thing to take away from this episode is to look at your revenue, look at your profit, and determine what aspects of those numbers you would like to change and then quantify that change and work backward to figure out what you would actually need [00:06:00] to do to reach that call.
Alright, y’all, thank you so much for tuning into this episode. Always grateful to have you here. I hope that you take away some information that you can implement in your practice and in your life. Any resources that we mentioned during the episode will be listed in the show notes, so make sure to check those out.
If you like what you hear on the podcast, I would be so grateful if you left a review on iTunes or Spotify, or wherever you listen to your podcast.
And if you’re a practice owner or aspiring practice owner, I’d invite you to check out The Testing Psychologist mastermind groups. I have mastermind groups at every stage of practice development; beginner, intermediate, and advanced. We have homework, we have accountability, we have support, and we have resources. These groups are amazing. We do a lot of work and a lot of connecting. If that sounds interesting to you, you can check out the details at thetestingpsychologist.com/consulting. [00:07:00]You can sign up for a pre-group phone call and we will chat and figure out if a group could be a good fit for you.
Thanks so much.
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