How many of your staff have any understanding of the financial side of your veterinary business?
Here's a fun way to help them understand the 'financial facts of life'.
I've had many conversations with practice owners and managers where they complained that their staff just didn’t seem to ‘get’ how expensive it was to run a veterinary practice.
They were sick of the 'eye rolling' every time there was a discussion on practice expenses and they rightly felt that often their staff saw large sums of money come over the counter and assumed it all then went into the pocket of the owner! If only!
The fact is that many staff members do regularly see large sums of money being paid by clients to your veterinary practice…. yet how many of your staff have any understanding of the bills that then need to be paid? Is it any wonder that they assume that most of that money they see goes straight to the practice owner?
So the question you need to ask is how many of your staff have any understanding of the financial side of your business? I’m not suggesting they need to have access to your complete financials but there should be some regular discussions on the financial basics in every staff meeting.
One technique that a veterinary practice owner told me about years ago and I’ve since shared many times is a great way to get across the financial facts of life in your veterinary business.
So What Are the Financial Facts of Life?
Step 1
Before your next staff meeting if you haven't already, work out the average percentages that you spend on various expense categories in your business monthly, e.g. x% on wages, x % on drugs, x% on power, etc
Get $100.00 worth of one dollar coins and tip them into a bag.
Step 2
At your next staff meeting tip all $100.00 worth of coins onto the table and pile them up.
Explain that the 100 x $1.00 coins represents the monthly amount of money that comes across the counter, known as revenue.Then as you read out each expense category, ask a staff member in turn to take away that amount for each expense category from the pile of coins. Start with the largest expense category and work in descending order and make a record on a piece of butcher’s paper of the category and percentage spent.
When all expense categories have been accounted for point out that the small pile left is known as profit (revenue – expenses) and is the money left over for the purchasing of new equipment, etc. as well as the financial return to the owner for investing in the business (can also be helpful here to remind your staff about the current bank interest rates i.e. what the bank would give you if you invested the same amount of money)
Then point out that if together as a team, the small pile remaining can be increased by keeping control of expenses and working to increase revenue then it may mean that the new piece of equipment that they are all desperate to have may be purchased that much sooner!
Leave the butcher’s paper on the wall for the next few weeks as a reminder.
Step 3
At the following staff meeting put time aside to discuss a ‘Wish List’ of equipment that your staff would love to have or have replaced in your practice. Then discuss some ideas on how expenses can be reduced and ideas or plans to increase revenue. Add these ideas on to a second piece of butcher's paper next to your original list.
In a month or so revisit the exercise to see if percentages have changed and see how much closer you are to buying the new equipment on the ‘Wish List’.
I know this is a simple exercise and doesn't take into account many financial complexities but most of your team members really only need to get an idea of the basics and it's a good place to start!
Now I’d love to hear what you think in the comments section. What are your ideas on how to help team members understand the importance of keeping an eye on all the dollars?
I’ve done something very similar at staff meetings before. I normally split a dollar into pennies and divide up the expenses by percentage. I normally try to turn it into a game. Who can guess what percentage is spent on pharmaceuticals for example. It is also a useful exercise when there is a major new expense on the horizon (health insurnace is a good one in the US at the moment) to put it in perspective.
Mike
@mike_falconer
http://mikefalconer.net
Hi Mike, thanks for comment. I love the idea of turning it into a guessing game – I think it could be very telling to hear what the staff actually think the percentages are!
Hi Judy,
This is an annual event in our practice, but I use monopoly bills and start with $1000.
We use envelopes with a real invoice inside, say Electricity $1800, for the month, but then I know what percentage that is, and the staff member holding the envelope receives that number of dollars (ie: electricity might be 2% so they get $20 out of the $1000). Very enlightening to all, including myself!
Hi David,
That’s a great idea! I love the mix of monopoly money & real invoices – a great slice of real life 🙂