Dr. Deb shares what it takes to evaluate your business and why the new breakeven point is 10%.

Do not miss these highlights:

02:21 Profit in your business is like oxygen and money is your fuel

03:21 It's really important for your business to be profitable enough for you to pay yourself a living wage

04:47 Find the right accountant who really knows the laws, learn about what is tax-deductible and what is not, this can save you a ton of money

06:04 You don’t just have to look at what your profit is, but also what your salary is - You have to include that salary into your expenses

07:22 Within three months of marketing, you should see your profit change, you should see more clients, if that's not happening, you need to change your marketing strategy or your marketing person

08:10 Your lab profit should exceed your lab expenses by a minimum of 25%

09:27 Certain things in your business are going to have a higher profit margin than others

11:55 How to become profitable day in day out 

13:43 Pre-tax profit is your earnings before taxes. This is a revenue-generating activity that you should look at to see how your business produces for your benefit

14:09 Pull your P&L from quarter to quarter and year to year, to see where your expenses lie and see where you're spending all your cash

15:13 You need to have the clients paying you cash, before you can start doing a lot of big expensive things like marketing, videos and photography

19:04 If you have all expenses and very little profit, your focus needs to be on getting patients in the door, getting the services done in your practice so that your profit margin comes up

Resources Mentioned

Join Us in the FMBI Mastermind Group on Facebook.  You can find the Group at https://www.facebook.com/groups/5461914567153276/

<figure class="wp-block-image size-large"></figure>

Transcript of Episode #24:

Debra Muth 0:01
You're listening to the Functional Medicine Business Podcast featuring Dr. Deb, one of the most creative functional medicine business practitioners in her industry. She shares the wisdom and knowledge that she has gained over 25 years of functional medicine, a pioneer in functional medicine, scheduling, leadership and Practice Management. Dr. Devin has a wealth of knowledge and he's eager to share to help functional medicine become more productive, and for the practitioners and patients to live better lives. Our podcast shares the good and the bad of our industry because Dr. Deb knows the pain you live every day building a functional medicine practice with practical tools on how to manage money, taxes and patient care. She will discuss it all with you.

Hello, hello. Hello, and welcome back to FMBI podcasts. I'm your host, Dr. Deb. Today I'm going to talk to you about what does it take for a percentage of your business to be breakeven. And the new breakeven is actually 10%. At FM bi, we understand how it feels created by medical professionals for medical professionals. Are you racing from one patient to the next, skipping lunch and not sure how you're going to show up to your kids events? Not quite sure what that p&l sheet really means to your practice? And are you struggling to find the right partners in your business? Our program is based on the values of efficiency organization and prioritization. The FMBI 15k a day program will help you discover how to run an efficient operation and introduce healthy generating therapies for more income. Our business roadmap will help you scale your functional medicine practice using proven business approaches. We would like to invite you today to book a free discovery call with our founder Dr. Deb, simply go to our website at functional nbi.com/book free call and schedule your time today. So the truth of the matter is our profit in your business is like oxygen that we breathe every single day, your business can't hold its breath very long, without oxygen, right? Because we won't survive, we have to have fuel and in our businesses, our money is our fuel. So we all know in business that you have to pay yourself. But many of us when we start out, there's not enough profit, there's not enough money for us to pay ourselves. So we live off of the business in a slower fashion. Maybe we take money out to pay our car payment, or we take money out to pay our insurance, we take money out to go to the movies or have dinner, and we live off of the business. When we continue to do that we'll never get to a place of profit, where you're actually paying yourself a salary.

Now, I think that it's really important for your business to be profitable enough for you to pay yourself a living wage. So if you're a nurse practitioner, if you're a PA, if you're a doc, look at what the average salary is for that profession for the number of hours that you work in a week. And that is the goal that you should be paying yourself. Now, your accountant may tell you that you want to break this up. And if they don't, I'm going to tell you to get a new accountant. So from a tax perspective, there's a difference in the way that we pay ourselves. You can pay yourself W-2 income, you can pay yourself dividend income, you can pay yourself, distribution and dividend are very much the same. But there are also ways that you can pay for things that you do on a regular basis that are business oriented, they have to be linked to your business. So there are different ways that you can take money out of the business besides just w two. And I'm going to encourage you to find an accountant that's willing to talk to you about this. Because the reality is when we only pay ourselves w two income that is the highest taxed income that we could pay. And many of us are paying way more taxes than what we should for the money that we're taking in. And if it was any other business, we wouldn't be paying those kinds of taxes. So you want a creative accountant, one that really knows the laws and you also need to learn about what is tax deductible and what is not. This can save you a ton of money now I know it's Not the most favorite topic, nobody wants to listen to it, because it's kind of boring. But the truth of the matter is, there are a lot of things that we can do to take advantage of the tax system that is in place today. And our tax rate is always going to go up, it's never going to go down. So learning how to take advantage of legal tax breaks, I think is extremely important. And finding the right accountant is even more important, I've gone through at least seven or eight accountants in 10 years, because of the same reason, either they don't understand the tax law, they won't apply the tax law, the way it's supposed to be applied. Or they're just lazy, and they don't want to do what they need to do. And as a result, it ends up in me paying a lot higher taxes than I should have to pay, because somebody doesn't want to do their job properly. So that's my rant on accountants these days. Sorry if I'm insulting anyone, but it is the reality and it is the truth.

So once we've figured out that you're committed to this business, you're going to make it work no matter what we need to figure out what your salary is going to be. So not only do you have to look at what your profit is, but what is your salary, and you have to include that salary into your expenses, it's really important to do that. So start out with even a projection. I want my salary to be 120,000, by, you know, the end of next year. Put that down. And then let's work backwards in your company to figure out how are we going to do that? What are you going to have to do to make that salary? So I'm not a big budgeting person, I don't like budgets, I think budgets can get people in trouble. But I think forecasting is really important. So from year to year, actually, probably twice a year at least I look at my expenses. And I compare them to the previous year. So I want to know, how much did I spend on marketing this year compared to last year, and have my profits gone up as a result of that, you need to be tracking this otherwise, you are wasting money on marketing, if you're not getting a return on investment, marketing dollars are expensive. And within three months of marketing, you should see your profit change, you should see more clients in the door, you should see more sales, you should see more people calling you. If that's not happening, you need to change your marketing strategy, or you need to change your marketing person because you're not getting a good return on investment.

One of the other things that I like to look at our my office supply costs, my lab supply costs, my employees typically stays about the same, that doesn't change very much. And it's hard to change that right unless you're going to hire somebody or fire somebody that cost relatively stays consistent. But there are costs that you have power and control over. Office supplies are one of them. Lab expenses are another. And so what I want to see in my lab expenses is does my profit from my lab, exce