Every new business owner opens their business with a dream and motivation for success. However, owning a business can be a reality check for many business owners, especially when it comes to a lack of cash flow. There are certain pitfalls every optometry practice owner should be aware of before they open their own business so they can make decisions to avoid them. A designated optometry accounting firm or program can help practitioners meet their business goals.
1.) No business plan
Every business owner needs to have some business plan before opening their own practice that outlines specific goals that are measurable and trackable. Your business plan should also analyze local and online competitors, including a plan for marketing and products, outline staffing requirements, and consider risk management scenarios.
There are templates online business owners can download and fill out to fully develop their business plan. Some banks also require a detailed business plan before they will consider applications for loans.
2.) Debts are too high
While all new businesses accrue a certain amount of debt, some business owners go above and beyond in acquiring new debt by over-spending. Don't fall into the financial pitfall of purchasing things you want, instead of what you need. Be thrifty when you can, including when you're purchasing office furniture and décor. You don't want to accumulate an extra $25,000 on unnecessary ornate chairs and paintings for your waiting room. Your debts should be covered by the gross revenue you are bringing into the practice. Don't forget to include your student loans in that debt bracket.
3.) Using outdated or inappropriate accounting systems
You should be using an optometry accounting system or firm that is up-to-date and specific to your business. If you're entering numbers into an Excel spreadsheet, you're not utilizing intuitive technology that can help you plan for the future and see exactly where your expenses might be detrimental. You want to utilize your cash flow effectively and minimize unnecessary expenses.
Optometry bookkeeping can also help you plan sales, advertising, and other incentives to bring in new clients and expand your customer base.
4.) Rent or mortgage is too high for the size of the practice
While you want to pick the perfect location for your practice, you also don't want to enter into a lease or mortgage that is too high for your cash flow. You'll likely need to start small, and then look at options for expansion later on, once your practice has an established customer base and you have a higher profit margin. In the meantime, utilize the space you have so that your practice runs with efficiency and quality, rather than quantity.
5.) Not preparing for declining revenue
Whether it be the seasons, low patient numbers, or the inability to sell enough products during an exam, optometrists must prepare for these factors affecting their bottom lines. Sometimes these can last for a month, or a quarter. Prepare for the worst, and hope for the best, even financially.
Let the accounting experts at Caro & Associates help you with your optometry bookkeeping and accounting needs in your optometry practice. Call us today at (206)-497-0671 to schedule a free consultation.
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If you are aware of the most common financial issues optometry practices face, you can plan ahead.