IDOC is excited to announce the first benchmark report for our new Books & Benchmark; Financial Statement Benchmarks are live. With over 30 practices connected to the database, we’re now able to run benchmarks. Let us share a couple of aspects of how we do benchmarks that we think are uniquely helpful to our members.
Histograms, not percentages
Numbers matter, but visualization is one of the key ways we take data and turn it into information.
For example, a benchmark like non-OD Payroll as a percent of collected revenue. This practice is spending 16% of revenues.
We could note that 16% is in the bottom 20% of the data set, but we believe it’s more helpful to see what the distribution looks like and where a given practice fits. How high are the highest practices? How wide is the distribution?
A focus on King Cash
Profitability has a high impact on cash reserves and cash flow, but profitability and cash flow are NOT the same thing. We aim to help owners know how much cash to keep in the practice and understand the true variance of cash.
By setting a cash reserve target at the average monthly expenses from the prior six months, excluding owner compensation and profits, we can help owners assess whether they need to beef up their checking accounts OR (more likely) take a distribution. First, we’ll help owners see the movement in practice cash over the prior 12 months.
Then, we’ll show owners how much other practices keep in their checking accounts relative to the cash reserve target we recommend. Interestingly, the average practice in September 2022 has around double the amount of cash we recommend. It may not be surprising that practices are being conservative after the COVID shutdowns. But in an 8% inflation environment, we don’t recommend sitting on a ton of cash. Better to get it out of the practice and put it to work.
Complimentary benchmarks for greater context
Very few metrics operate completely independently of other metrics. IDOC Books & Benchmarks groups inter-related metrics to give you a better sense of that interplay. For example, Practice Net (sometimes called Optometric Net) is the combination of OD pay and EBITDA (Earnings Before Interest, Tax, Depreciation & Amortization).
Since owner pay is all over the map (owners, how did YOU decide how much to take as salary?), it’s interesting to look at EBITDA, but the metric that creates true apples-to-apples comparisons is Practice Net.
12 Months Takes the Noise Out of Trendspotting
The first time we checked our metrics, the benchmarks were all over the place. We’ve run benchmarks on over 900 practices; we know what they ought to look like. But our first run was… wrong. Then we figured out the problem: we were looking at a single month of data.
Because of the seasonality of revenues and the timing of bills relative to income coming in, financial results are going to have high volatility from month to month. Revenues, especially, will swing wildly.
By using a trailing 12 months (or rolling 12 months), we can smooth for seasonality and noise. What’s more meaningful: seeing that your September 2022 revenues were 20% higher than September 2021 or knowing that the 12 months ending September 2022 were $1.05MM compared to $1.00MM in the 12 months ending August 2022? We believe it is the latter, showing a smoothed annual growth rate of 5% means more than a single month’s result.
Just the Beginning
This is just the first dashboard for IDOC Books & Benchmarks. And these metrics will only grow more meaningful as we get all 80 practices that are currently enrolled caught up and connected to the benchmark engine and continue to grow our client base from here.
Still to come:
Gold In, Gold Out
One final advantage our benchmarks enjoy: they are based on financials produced by a team of professional bookkeepers. Because IDOC controls the financial statements, we know that these benchmarks reflect reality.
Beyond understanding your metrics, a clean set of books will give you peace of mind in KNOWING how your practice is performing and make tax planning significantly easier.
Want to get a better understanding of your practice’s performance? Contact IDOC to get signed up for IDOC Books & Benchmarks today!
Hayley Stewart, IDOC Financial Services Manager
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How many private pay opportunities do you have each day?
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Can you complete that sentence?
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Doctor, I see floaters in my vision. I think I have a retinal detachment!
I don’t need an exam because I did a screening online.
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Here’s a not-too-controversial observation: everyone would like to earn more income. As practice owners, your income is a function of the revenues your businesses bring in and the expenses you have to pay.
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Good marketing for an independently owned optometric practice isn’t one size fits all, especially now when there are multiple generations with unique mindsets, characteristics, values and eye care needs in the United States.
Let’s say that as an independent Optometrist, you’ve decided to add new eyewear products into the mix at your practice, and now you’d like to market these products to existing and prospective patients.
I’d like to share an incredible customer service experience I had recently.
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The Inevitable Plateau - “a state of little or no change following a period of activity or progress”
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I was named in a lawsuit once. Fortunately, I was the doctor who found the problem – not the one who misdiagnosed it. Nothing really came of this on my end, but I still recall the moments of terror that gripped my body every time a letter showed up from the legal firm handling the case.... Read more
Starting a solo optometry practice can be a daunting task, especially considering most optometrists do not graduate optometry school with a strong grasp of the business aspects of running a private practice. There are many things you need to do prior to your grand opening, but the work doesn’t... Read more
Office Managers are responsible for setting the expectations for all office employees. The optical staff is a unique situation because the patient experience is easily measured. Good communication and clear goals will go a long way to improve patient satisfaction in this very... Read more
Google and social media have changed the ways we look for information, discover area service providers and research options for health care, and as a result, many Optometrists who own a practice now question which tactics are the most effective to increase brand awareness, number of... Read more
The Science of Selling
Have you ever made what you considered an iron clad case for why a patient should purchase a certain product or service from you, only to have them walk out without ever making the purchase? As clinical professionals, we can be very logical in our approach with... Read more
Your optometry practice is incredibly valuable to you. “Well, Nathan” – you may say – “of course it is!” But have you ever thought of why it’s valuable?
You spend most days pouring your blood sweat and tears into it: hours and hours of patient care, planning,... Read more
The internet isn’t usually a popular topic in conversations I have with owners and staff members of optometric practices. Dealing with reviews and competition from web-based retailers along with the challenge of creating and maintaining a website and good social media marketing may have many... Read more
Optometrists in private practice sometimes fail to offer a clear reason why someone should choose them for their vision care over competitors - on their websites or in other marketing collateral – sometimes when you try to market to everyone, you fail to capture... Read more
When working with small business owners to create marketing plans and strategies, I run across the following scenario far too often: “Hey, I’m not sure how to log in to my Google listing. My office manager used to handle that for me, and she’s not on the team anymore... Read more
“You might as well ask me to describe the essence of music, or the color of starlight.”
Did you make any New Year Resolutions? Well, I did. I do every year, and in keeping with my obsession with goals and metrics that I have professed here repeatedly, I write them down... Read more
For starters, I’m not a licensed psychologist, I just play one as a practice management consultant. It’s been my observation that whenever human beings come together in an environment where they are required to work together and interact, inevitably some tension and conflict will arise.... Read more
Your schedule has gotten busier and you’ve hired an associate OD. While you would like to keep the associate’s schedule filled most of the time, it’s not uncommon for an associate to have some gaps in his or her schedule – at least in the beginning. This often leads to some resentment by the... Read more
Before anyone panics, I am not suggesting that most practices go out and spend $80,000 or $100,000 on a COO tomorrow, or that your manager is due a large raise for 2018. I typically only recommend that type of role for multi-location practices grossing over $2M-$3M per year: practices... Read more
Sometimes it’s not the inventory you choose to carry or the reps you choose to indulge. It’s not the pricing or the shipping or the cadence of your reorders. As we head into the tail end of the holiday season, I can’t help but think of the process of opening presents.
Everyone has... Read more
Texting is an incredibly tempting mode of communication for marketing-minded businesses competing for the attention of consumers, primarily because the open rates on a text from businesses to consumers are incredibly high (98%) compared to other forms of communication (email is around 20%,... Read more
“How many frames do I need?” “How many frames should I carry?” “How much stock should I have in inventory?” It doesn’t matter how you phrase it, at least 1/3 of my consultations start the same way. I’m going to make this all very, very easy for... Read more
If you are in a competitive area, you’ve already learned that marketing is a necessity to attract brand new patients to your practice. It’s easy to confuse marketing tactics – sending email, creating Facebook posts and advertising in a community magazine, for instance –... Read more
A practice owner pulled me aside at our most recent conference in Denver to start thinking of an exit plan. I always ask two questions when these discussions come up:
“How long do you see yourself continuing to own your practice?”
“How is your retirement savings coming... Read more
A consumer-centric culture with a focus on customer service is becoming increasingly important for brick & mortar businesses. While I do believe most practice owners strive to deliver on great service, it requires a team effort. I often hear owners tell me they want to be known in their... Read more
Most businesses have polices that employees are required to follow. In general, office policies are a good idea. Policies provide structure for how to conduct business and create consistency around processes and operations. But in a service-based industry, well intended but rigidly executed... Read more
With all the talk of private equity roll-ups and regional alliances, many practice owners are concerned that if they aren’t a large, multi-office, multi-doctor practice, they don’t have a future in independent optometry.
Is that... Read more
One of the interesting mysteries that I get to unravel in many practices is the mystery of tight cash flow. Sometimes it’s obvious – a small practice with low profitability, for instance. But other times it’s not.
First off, what is tight cash flow? Here’s my simple definition:... Read more
Doctor: Would you like to order your contacts today, Mrs. Smith?
Mrs. Smith: That’s OK. I’ll just take the prescription and get them online.
What happened here? You just did a thorough, high-tech eye exam... Read more
For practices looking to grow, there are basically two paths: see more patients or generate more revenue per patient. Ideally, a practice will do both. One thing I consistently hear from ODs is that it’s hard to generate high revenue from contact lens patients. Even when selling annual... Read more
Can you find 20 or 30 minutes a week to hold a staff meeting? You might be surprised at the impact that it has on your optometry practice.
Your staff is your most valuable business asset. Your investment in optometry marketing, technology, office design, etc. will fail to deliver an... Read more
The very phrase can cause irritation, anxiety and bewilderment in the minds of owners who understand that they should somehow be participating in the conversations across the various social media platforms – but which ones are the best for optometry practice... Read more
While there is more than one way to achieve success, there are a few common traits that successful independent optometry practice owners have in common.
They refuse to accept the status quo. While others remain stagnant, ignore trends, and complain about the... Read more