Stacey Buck, the founder of the SLC Group, watched a nonprofit she loved deeply close their doors due to funding cuts and financial strain. This underscored the vital need for financial acumen in sustaining purpose-driven ventures, and it fueled her commitment to help other leaders avoid a similar fate. Dianne Baynes, the Integrator & COO of the SLC Group, brings a wealth of experience setting up sane, effective processes to streamline work and efficiency. She knows that everything from billing to onboarding to sales relies on the ease and workability of the systems that support them.
In this episode of TechTalk Podcast, Brad Cost, Jay Greenstein, DC, Stacey Buck, and Dianne Baynes, DC sit down to discuss:
Finding clarity and focus in understanding your priorities and managing your money.
The common experience of being a chiropractor and business owner all at once.
Becoming a business owner does not mean debt and delayed profit!
SHOW NOTES:
1:28 – Clarity and focus in managing money. “Cash management and money management is such an empowering topic once you can wrap your mind and your fingers around it. I came to Profit First years before I discovered this particular system. I was actually cleaning up a bunch of personal financial mistakes I made in my early twenties when I discovered that the method that worked best for me was like grandma's envelope system, right? I would get my cash income, divide it into my different envelopes for gas, grocery, bill, etc. This process allowed me to finally build a personal financial foundation for the first time in my life. I started getting into bookkeeping and discovered really early on that the clients and business owners I was working with were clueless about money, much like I had been a few years before when I was working with my own personal finances. I started thinking that there's got to be a better solution for them when I came across the book Profit First by Mike Michalowicz. As I was reading it, it was just aha moment after aha moment. A couple of years later, when I launched the SLC Group, I decided that helping clients implement a system to the way that they manage their money was going to be one of the primary things that we did.”
3:41 – Overlapping schedules to becoming friends and coworkers. “Stacey and I had an overlap in the Colorado Chiropractic Association. I used to do a lot of teaching for them when I was living in Colorado and Stacey was working with them. We've had a lot of other overlap at KMC University - with meeting Stacey with CCA, I ended up bringing her over to KMCU at that point. Stacey was actually helping me with my finances for my company and it was so necessary. When I was in practice, I wish I had that, and the conversations went from there. I got to join the SLC Group and be a contribution for like the operations part, specifically with healthcare providers.”
4:46 – Understand your priorities as a business owner. “Profit First is a cash management system. In accounting, we're taught your sales minus all of your expenses equals your profit. It teaches business owners to see profit as this thing that's left over after you factor in all of the important things that happen above that bottom line. At Profit First, we put profit first. We wondered, if we dedicated that we get income at the beginning of the sales cycle and we take the money that's going to be used for emergencies and for rewarding or paying our business owners off the top. Then, with the money that’s left over, we create the budget. Within the Profit First system, all of your deposits go into the income account, and it's divvied up into different buckets based on preset percentages. These buckets are your owner's pay, tax savings, profit. Then, the leftover money goes into your operating expense budget. It just helps to clarify what the priorities in a business are. The priorities are not the operating expenses - the priorities are paying the owner and saving for the future of the company.”
7:15 – Accounts within your account. “The beautiful thing about the Profit First system is that you create it within your bank infrastructure. You've got actually separate accounts - there's an income bank account and then multiple different bank accounts where the money gets funneled into. Most of us do what we call bank balance accounting - you open up your bank account, see how much money you have in there and that tells you how much you have available to spend. Well, if all of the money that's running in and out of your business is in the same account, how do you know when you look at your bank balance, how much should be set aside for payroll, taxes, and more? By segmenting it into different bank accounts by different purposes, it clarifies how much you have to spend in each expense bucket. It also eliminates the need for using all of these Excel spreadsheets and financial statements to determine what your budget is. Beyond that, there are bank transfers happening. There have been a number of really amazing tools that have come out that make it easier. One of the best is WeBank with Relay Bank - it was built around this system. They've got automatic percentage-based transfers, so you tell it what percentage you want deposited into these different buckets on whatever days and it takes the amount of money in your income account and does your Profit First allocations for you. Utilizing the technology makes it a much easier system to sustain.”
14:42 – Cornerstones of clarity. “EOS really brings clarity. From an operations standpoint, it is the twin sister of Profit First, which is the financial clarity you need for a business that gives you structure and systems. You don't have to make it up as you go, and you can stop at any time. With humans in the system, things can go off the rails in a business and it can be really difficult to get re-oriented. It's a great way to keep that operational orientation that matches the Profit First orientation for the finances of a company. They're both cornerstones of clarity.”
16:27 – Chiropractor and business-owner all at once. “For me, it was like, congratulations, you're a doctor but surprise, you're also a business owner! I didn't go to business school. Our schools make sure that we can get licensed, take really great care of our patients, and make a difference in the health of our community, but they don't teach us to be businesspeople. I had one quarter of accounting and understood the words credit, debit, and T accounts. I also had some formal education in how to handle some accounting or look at what my bookkeeper was doing, but that was not helpful for running a business. In some conversations with doctors, it's almost like an embarrassment or a shame attack that happens when they realize they don't understand their business. They know they have a doctorate and think they should be smart enough for this, but there's a disconnect there. I didn’t understand what was going on. I hated it. I resented it. I felt confused by it. I would have to work twice as hard, but working with Stacey, I really got more clarity and understanding of the ability with using the Profit First system. I could actually be present with my money and figure it out. It was again transformational.”
21:48 – Un-normalize business debt and waiting years for profit. “We live in a society that has very much normalized having debt and investing in your business so deeply that, for the first few years, there’s no profit. Those messages live with us to where we think that we're doing it right when we're broke, frazzled and overwhelmed. The first step to break that cycle is to say it doesn't have to be that way. When I started my business, I didn't want to be broke for the first three years. It was a commitment that I was able to pay my bills and take care of my family with the income from my business. As we start to shift that perspective, more and more business owners can start to realize they don't need to take out $100,000 in business loans to get their practice up and running. Start small and incrementally build to the point that your cash is covering your bills before your bills need it. That mindset shift is necessary at the beginning.”
28:32 - Step one in the Profit First process. “The very first step is always illuminating where we are now. We need clarity about what your finances look like today and where you want to go. We start with a profit assessment where we look at how much money your business has brought in for the last 12 months and how you spent it. That gives us a picture of what moves need to be made to right the ship. From there, we also want to have a conversation about what winning looks like to you. When your business looks the way that you want it to, how much are you working? How much are you taking home? By using those numbers, we can back into what the revenue needs to be to get the allocations right for paying the owner correctly and planning the exit strategy. Once we have that process, it’s laying out a roadmap of how we're going to get the Profit First system fully implemented over the next several months.”
30:06 - Step two in the Profit First process. “For folks who want to start small, it starts by just opening up profit and tax accounts and making allocations to those two. When you're ready to implement the entire system, we open up multiple bank accounts, change all of your income deposits into the one deposit account, and start doing those recurring allocations. Profit First doesn't happen overnight. We have this financial health calculator that shows, based on your monthly income, what your owners pay, taxes, and operating expense budget should all look like. If you are somebody whose practice is spending 95% of the money that you bring in on operating expenses, we're not going to drop that down to 50% right away because that is a recipe for failure. We create a roadmap that takes you through quarter-by-quarter adjustments. That being said, we do have an offer. We call it the Profit First Accelerator, which is for businesses that understand they are a mess but want to switch this around quickly. Dianne and I both come to the practice physically to have conversations with the team and staff. We look at everything that's going on in the business from both operational and financial perspectives so we can start to see what is causing the disconnect. With us doing the work for you and training your team on upkeeping the system, we're able to make what is typically a 12–18-month implementation happens in six months.”
34:13 - Percent of revenue a business owner actually takes home. “The answer depends. For chiropractic, it depends on the business size. If you're a practice that's making under $200,000 a year, 50% take home is normal. If you're a practice that's bringing in $1,000,000 a year, 50% is too high because typically you're going to have a team. You're going to want your owner's pay to be closer to that 30% range. There are tiers based on your annual revenue. At a specific revenue level, this is your allocation split with 50% owners pay and the rest divvied up between the others. As you get larger in revenue, your owners pay as a percentage of revenue decreases while the actual amount that you're taking home goes up.”
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