Top Financial Pitfalls to Avoid For Your Dietitian Private Practice
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[00:00:00] Libby: If you're looking to grow your business as a registered dietitian, you've come to the right place. If you're not sure what to do or what steps to take next so that you can create flexibility and freedom in your life, then you're going to learn a lot from tuning into our podcast here at Dietitian Boss.
[00:00:17] Libby: I'm Libby Rothschild, the founder of Dietitian Boss, a [00:00:20] fellow registered dietitian and business owner. And in our podcast, I share the highs and the lows, and I talk all about how to grow your business. Get it started. And I interview our clients to date. We've had over 200 interviews from clients who share their journey on our podcast dietitian boss.
[00:00:38] Libby: Hello and welcome to today's [00:00:40] podcast. I'm excited to talk about top financial pitfalls to avoid for your dietitian private practice. Now, this topic comes up a lot, especially for those of you that are a little bit further along. So I want to deep dive and talk about well intentioned dietitian business owners.
[00:00:58] Libby: And I'm going to talk And whether you're starting [00:01:00] out or you're looking to fine tune your business finances, today's episode is going to equip you with the insights that you need to avoid common mistakes to set up your practice and achieve long term success. Like having a flexible schedule, taking summers off, working a four day work week, being able to take vacations as you please, et cetera.
[00:01:19] Libby: And that's made [00:01:20] possible when you really master and you understand financial pitfalls. So you don't fall into those common traps. The first pitfall. Includes a lack of a budget. And I want to ask you, do you have a budget now? Maybe you have a budget for your family, for your household, a personal budget that you keep and you manage how much you spend on groceries and entertainment [00:01:40] and running a budget for your business has similar functions, but it would be separate from your personal budget.
[00:01:46] Libby: So if you don't have a budget as a reminder, I want you to think about how to start a budget for your business. No matter what business you're in, you're going to need to have a budget. So you want to avoid operating without a budget. Okay. And a budget is essential as a financial road map, [00:02:00] and it outlines expectations for your income and expenses.
[00:02:03] Libby: And it's important because it helps you keep track of your money. So you're not overspending or underspending with your costs. Now, I know what you're thinking. Oh, my costs aren't too high. I don't need a budget. But that's not true. Because when you pay taxes, you need to have just a decent understanding, even if you're using books.
[00:02:18] Libby: Google sheets or pen [00:02:20] and paper, or you are using some software functions like QuickBooks, and we have some resources for dietitian software that we use and recommend on our website under dietitian resources. So definitely check that out at dietitianboss. com. So without a budget, it's really easy to lose sight of where your money is going, right?
[00:02:38] Libby: Which can lead to what's called [00:02:40] cashflow problems and unexpected financial stress in times of economic downturn. So when you're starting with a simple budget. Then you have a clear view of your financial situation and that can help you make informed decisions and keep your practice on a stable financial path.
[00:02:55] Libby: So one tool that I want to suggest to you would be a spreadsheet. Now we offer a [00:03:00] spreadsheet and we've already created tabs for you. So, you know, just Plug and play. So if you want to use that spreadsheet and you even want support and insight from us, me and my team, I invite you to join the library where you have access to not only financial education for your business, but the tools that you need to start and grow your business and avoid these common pitfalls.
[00:03:18] Libby: Now, I want you to think about. [00:03:20] Budget goals. I'm going to give you some tactical takeaways. So start by identifying your main financial goals, right? That might be how much money you want to make. And then I want you to look at controlling expenses by thinking about how much you're going to spend, having some way of managing that, right?
[00:03:33] Libby: So documenting your expenses. And then I want you to think about saving for future growth. So [00:03:40] what does that mean? Well, you're allocating a certain percentage of what you make for taxes, of course, which will depend on where you live and your, how much you have to pay in taxes, what percentage that might look like, but you also want to be saving, whether it's for your retirement account or just saving, adding some money away, which is really important.
[00:03:54] Libby: I'm not going to go too deep into that today, but I do want you to think about savings. So you have the means to invest, or even if you have [00:04:00] money in your business that you can use in times of difficulty. The second tactical tip would be to get specific. So I want you to measure objectives like reducing expenses by 10 percent or saving 500 a month for marketing or saving 30 percent for taxes.
[00:04:15] Libby: So those specific tangible measurements are going to help you get better at avoiding that [00:04:20] pitfall of not having a budget and not being specific about your budget. The second pitfall includes lack of tracking metrics. Now, this is something I love working with our clients who already have a business and they're growing, but that doesn't mean if you're starting out, you should dismiss this topic.
[00:04:34] Libby: So another, Key financial pitfall would be not tracking your income accurately, [00:04:40] right? So a lot of dietitians and our, even our clients will say like, Oh, I made six figures, but I want you to think about tracking your income consistently and monitoring how much you're taking home. So that means you're aware of your expenses.
[00:04:52] Libby: So your profit margin. That means how much are you actually taking home after taxes and after paying out some of the credit card processing fees [00:05:00] and how much your overhead is, whether that's through an EMR like practice better or you're paying contractors, whatever, or maybe business coach or any other kind of CEU.
[00:05:07] Libby: So all of those expenses need to be considered. I also want you to think about money coming from various sources. Maybe you have affiliate monies or you work with brand sponsorships or you do some consulting or speaking or teaching. So whether you're talking [00:05:20] about client payments, insurance, reimbursement, or product sales, think about all the different streams of income that you're earning.
[00:05:25] Libby: And it's important because It's going to give you a clear picture of how much revenue your business is getting, and then you can identify trends and start to learn what your projections are for how much you're going to take home versus pay for taxes versus you need to spend, or you [00:05:40] want to allocate towards marketing or even your operating costs.
[00:05:43] Libby: Now, if you want to learn and you really want to dive deep dive into financials, I do have a podcast episode where I interview the author of profit first for therapists. So definitely check that out. You can find that on our website and you can check out our podcast and find that previous episode and we deep dive and talk more [00:06:00] specifics about nitty gritty with finance.
[00:06:02] Libby: So I also want you to think about if you're overspending, we've got some clients that spend too much money in our business and they're not aware of having limits of what they're spending because they need to focus on earning more. So when you regularly track your income and you know what metrics you're looking for, like profit margin, gross revenue, then you're going to have an [00:06:20] idea of how to stay informed with your financial health, and that'll help you do better planning.
[00:06:24] Libby: So let's say you come to me and you say, I don't know if I should hire a contractor. I don't know if I should hire an employee. I don't know if I can't afford the software. You'll be informed about those decisions once you're aware of some signs. Simple financial metrics that you're tracking, which will only be made possible if you have a budget to work from.
[00:06:39] Libby: So we have [00:06:40] a tool inside of the library. It's a profit and loss statement, and it's a whole booklet. That's going to help you make habits and really accurate decisions about your finances. So we show you how to track a profit and loss statement. We talk about what that means. We show you the metrics you need to be aware of, and we talk to you about how to look at your finances, including your budget and key [00:07:00] metrics, and what metrics need to be looked at as your business grows.
[00:07:03] Libby: So definitely encourage you to join the library so you get access to our tools and us for support to walk you through your stage of business. Now, the tactical tip to take away from the metrics tracking would be to track your income, right? So list all your sources of income, including client fees, which we sometimes forget about, [00:07:20] insurance reimbursements, if you have any, and additional revenue streams.
[00:07:23] Libby: Maybe you forgot that you did a talk and you had extra monies from that. A second tip would be to use accounting software, or you can use a single spreadsheet to track your income consistently and review it monthly. So we have a budget tracker inside of the library that is going to help with this We also have a discussion inside the library from Jenny from simple profit [00:07:40] She's a therapist and CPA that talks about the differences between Softwares and spreadsheets and if you do want to use a simple spreadsheet instead of investing in accounting software right now That's totally okay But you will need to track your budget especially because you're gonna have to pay taxes at the end of the year So it's not something, it's a law.
[00:07:56] Libby: So you definitely want to make sure you're aware of how much you have to spend, [00:08:00] how much taxes you have to pay, et cetera. So some type of tracking tool is essential. The third pitfall would be categorizing expenses. So you're not categorizing your expenses at all or properly. So categorizing expenses means that you're sorting your costs into specific groups, like software, office supplies, or even rent, if you have overhead, or maybe you're [00:08:20] Expensing in office, right?
[00:08:21] Libby: And this applies whether you're running an online practice, accepting insurance or managing a brick and mortar location or all of the above, right? So everybody needs to categorize expenses. It's important because proper categorization does help you track spending and avoid budget overturns. So for online practices, That's going to be digital [00:08:40] investments, right?
[00:08:40] Libby: So your what's called tech stack. So for us, that's our project management tool. Asana, we use Kajabi for our all in one platform. It can be email marketing. So all of those expenses that add up, some of them free, some of them not, you're going to have to start thinking about how much that costs and how much you're willing to spend, which would be proportional to how much you're making and which can [00:09:00] depend on your growth strategy in terms of your business plan.
[00:09:02] Libby: If you have a rapid growth plan, goal. You might want to invest more into your digital investments. So for those of you taking insurance, that would be claims processing costs and brick and mortar setup would be spending on rent and utilities. And if you're doing all of the above, then it would be a combination of all of what I had mentioned.
[00:09:19] Libby: For [00:09:20] example, if you have a brick and mortar and you are investing in digital investments and you'd consider all of the examples that I mentioned. So without categorization, of appropriate expenses, you do risk financial surprises and poor budget management. And if you have poor budget management, you can't make strategic decisions about when to hire, what to reduce and your software.
[00:09:39] Libby: And then you risk [00:09:40] burnout because if you don't hire, whether it's a contractor or an employee, and you're doing everything yourself, then that can be challenging to take a vacation. And if you're not using automation and software appropriately, because you're not investing in your digital investments, then that's an opportunity as well for you to manage your time and more efficiently.
[00:09:55] Libby: So you definitely want to know how to categorize your expenses appropriately. So tactical [00:10:00] tip I want you to take away from this would be to break down your expenses into fixed costs, like rent and salaries. And then variable supplies like marketing, and that's going to help you ensure accuracy. So the second tip would be to regularly review and adjust these categories as your business evolves to ensure accuracy.
[00:10:17] Libby: So you want to set a date with yourself and inside of [00:10:20] our library, one of our resources walks you through how to do this. So I have a workbook that helps you set regular goals with yourself, identify your metrics for success, and even use us as a guide. to help you identify what some of your struggles are so that you can get on track and learn some of these skills that you might not be so familiar with.
[00:10:36] Libby: I want you to create a monthly spending plan. So that means you're going to [00:10:40] outline your expected income for the month and expenses for the month. And that applies to online business insurance practices and brick and mortar locations alike. This is important because a spending plan helps you anticipate costs and manage cash flow.
[00:10:51] Libby: So for online practices, it ensures that you account for digital tools and marketing. As I mentioned before, those digital tools can include a CRM, could include [00:11:00] practice better. And for insurance based practices, it helps you balance client reimbursement with operating costs. So brick and mortar setups benefit from tracking rent, utilities, and supplies.
[00:11:09] Libby: And without a plan, You can overspend and then you've got financial instability. The number one reason, statistically speaking, is due to money due to running out of money. So you want to make sure that you don't [00:11:20] fall into that trap. So you want to have a decent sense of the money going in and out of your business.
[00:11:25] Libby: And it'll really help if you can do monthly projections. So I also want you to think about monitoring and adjusting regularly. And that's going to help you as I gave a tip earlier, like monthly, it really sitting down and making an appointment for yourself [00:11:40] is crucial for any type of business. And it's going to help you get a sense of your trends, which are unique to your business.
[00:11:46] Libby: And they might be seasonal. So a lot of times clients come to me and they say, I'm having a bad month. And I'll ask them, well, how was this month last year? How are you doing for the year to date? And they'll say, I'm not sure. And that's where we go back to the workbook that I give you inside of the [00:12:00] library as a tool.
[00:12:00] Libby: Okay. Sometimes go through it with you or have you go through it and we go through it together to some extent, and we'll look at your finances. We'll look at your budget. We'll look at your estimates. We'll look at what you've achieved and we'll see patterns and that can really help you make informed decisions, but you can only learn those patterns if you have a regular date with yourself to review your budget and compare your plan [00:12:20] budget with your actual spending and income.
[00:12:22] Libby: Making adjustments as needed can help you address any discrepancies and definitely ensure that you stay on track. For example, what you think you spent versus what you actually spent. And what I see the most common with dieticians is that we think we earn a lot more than we actually do. We might not keep into account credit processing fees and all sorts of other fees [00:12:40] that we, we didn't think were going to be so high in taxes.
[00:12:43] Libby: So other tips before conclusion would be, I want you to set up an emergency fund to plan for future investments. And even just having a padding in your business is really important. I also want you to seek financial professional advice. So you can talk to somebody about your particular situation to adjust these numbers [00:13:00] that work for you.
[00:13:00] Libby: And we did discuss this and a guest session inside of the library from Jenny from Simple Profit. She talks about, well, she gives financial advice and talks about how to make this work for you in terms of financial planning, emergency funds, and future investments. As to conclude, I want you to avoid financial pitfalls of lacking a budget.
[00:13:17] Libby: Not tracking your income, failing to [00:13:20] monitor and adjust regularly. And that's going to help you set up your business on a path to financial success. And by staying proactive and vigilant, you'll ensure that your practice remains profitable and sustainable. Whether you're operating online in person, except insurance or combination, I want you to stay tuned for more tips to help you build your thriving business.
[00:13:37] Libby: and a financially sound [00:13:40] practice. Thank you so much for joining me today. Looking for support to grow your dietician business or even get started? I invite you to join the library, our monthly affordable membership that shows you exactly what to do every step of the way so that you can create the business of your dreams.
[00:13:57] Libby: Not sure if it's the right time? The membership gives you an [00:14:00] option to Go at your own pace. We have modules, a roadmap to show you exactly what to do and monthly live calls, as well as new content that we release every single month based on requests. Inside of the library, we have four stages of business.
[00:14:14] Libby: So whether you come in getting started or you want to enter the membership and grow or scale your business, we [00:14:20] have the appropriate resources for you and our team, including myself available to answer your questions, head on over to dietitianboss. com and check out the library today. We'd love to see you there.
