When I hear people speak of the 20s, it brings to mind one of the most iconic decades of the 20th century. Following the first World War, this decade was characterized by Fun, Frolic and Freedom with flappers, Jazz music and economic prosperity.
And here we are, about to embark on a new decade, the new “Twenties.” What does it hold in store for us?
Just like the name suggests, 2020 is a great year to refocus your vision for your business. What is your plan for this decade? Will you be purchasing a new practice? Retiring from your current practice? Do you want to improve the business function of your practice? Are you in a growth phase?
I suggest that you review the business as a whole and then break it down to evaluate each area of the business. Start with revenue. What are the core revenue streams driving your business? If you are offering Primary Care, these are likely exams, diagnostics, eyeglasses and contacts. There are guidelines to evaluate if you are at healthy percentages for each of these. These guidelines are dependent on the strategy of your business. For instance, a medical practice can expect more revenue from diagnostics whereas a practice offering complex contact lens fittings will have more revenue generated in the contact lens category.
If you are looking for growth going into 2020, where do you expect it to come from? Controlling your expenses, increasing your prices, adding new services and products? If this is the year you want to start planning for your retirement, is your business healthy and attractive to a potentially buyer? What are the hooks that will entice the buyer to purchase your practice versus opening on their own?
Next, assess your pricing. The beginning of a new year is a great time for this exercise. A look at the expense side of your business will give you some indication of how healthy your current margins are. From there, you can test pricing changes to see how your patients respond. It has been our experience, particularly when it comes to increasing exam fees, that patients accept the increases quite easily.
Finally, take a look at your expenses. In general, 30% of your Revenue will be used on COGS. If this is higher or lower, it is worth ensuring that that result is consistent with your strategy. If you are a low cost, high volume location, a thinner gross margin may make sense. If you are selling a high volume of contact lenses, you may find that your COGS sneak up closer to 40%.
As we enter this new decade, poised to recreate what the world thinks of when we refer to the 20’s, embrace the opportunity to reinvent and renew your business. Be intentional. Evaluate every aspect of the business. Create a plan to meet your goals for this new decade and then work the plan. It’s time to roar!
is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at firstname.lastname@example.org.