It has always been a mystery to me why it is so difficult to convince so many optometrists to embrace the business side of optometry. There is a general tendency to abdicate responsibility for the practice's financial management. Some optometrists with high-powered practices are among the top 10% of earners in South Africa, which is remarkable. However, many others must be desperately disappointed with the lifestyle optometry is affording them. To create a high-powered practice, justice must be done to two aspects: clinical expertise and business acumen. This does not mean earning a BCom degree; it means having the will to learn basic business concepts and the right tools at hand. There is often confusion between practice management and the business of optometry. Practice management is about the day-to-day processes, such as cutting an invoice, whereas the deeper business concepts involve planning, funding, merchandising, branding, marketing, and so on. If you have a business, you need to understand and work with numbers; it’s the language of business. The key to it all is to have the right system set up, meaning the right chart of accounts run on the right software. Optometric software has historically been offline and does not incorporate a built-in accounting system. Now, Humint Online Software for Optometry is available, which will allow you to extract every bit of detail about your practice as a report. Humint will provide you with the right information at the right time, in a format you can relate to. Taking control couldn't be easier. Within ten minutes you will be able to assess the status of your business.
But here is where it invariably breaks down: the inability to come to terms with the effort required to implement the change needed to reap exponential benefits for the business. Nobody picks up a musical instrument and sets off entertaining friends from the get-go. No! it takes time and effort to train the brain and muscle memory. The requirement to learn over time applies to just about anything, such as sports, art, or mastering a keyboard. Yet, for many, the effort to introduce a better software package to the practice becomes a roadblock! This lends itself to getting stuck in outdated business practices, whilst the whole world is moving business online and utilising the best the digital world has to offer.
Another pitfall is allowing an accounting firm or bookkeeper to set up your business chart of accounts according to their best practices rather than your financial management needs. This often results in a modus operandi in which you wait to receive information after the fact, rather than receiving information at the right time, which will serve as tools to drive the business toward better profits. In other words: the right information at the right time in a format you can relate to. The GP%, for instance, is a potent tool to protect your net profit, but one must be assured that it is accurate and consistent over time. The optometrist/owner needs to ensure this happens.
Letting your staff voice a strong opinion about the ease of use of new software is a big mistake. This often happens without a full understanding of the long-term goal of the new software, and a tendency to fall into the involuntary motor actions of the old software. The biggest sin is judging software solely by its monthly cost, without fully understanding the business implications, which is easy if one is unfamiliar with the business's financial management.
A big danger in business is what we don’t know we don’t know. Did you know that if your cost and turnover remain constant, but you increase your average price by 1%, your net profit will increase by 5%? Likewise, if you increase your price by 5% your net profit will increase by 25%!
Did you know that with premises at R320 per square meter for 150 square meters at a mere 8% annual escalation, you will pay over R65 million in rent over thirty years? That should serve as adequate motivation to occupy your premises. The key remains to have the right information at the right time.
I was fortunate enough to retire from optometry at the age of 62 years. I was never the brightest spark in any class, but planning and making the right decisions allowed me to maintain my lifestyle into retirement. Setting up your business structure correctly has everything to do with your business success, right up to retirement, even if it may seem far in the distance right now.