Why Setting Up Your Business Finances Will Help You Make Your Money Work For You In the Long Run

Hi, welcome to the Pelvibiz Podcast. Are you a pelvic health PT or ot? Struggling to start your own practice? This podcast helps pelvic health PTs and OTs get out of debt, gain the income they desire, be able to treat patients without insurance restraints, and learn how to create time freedom for yourself and your family. I'm your host, Dr. Kelly Alhui, founder of Ortho, Pelvic Physical Therapy, Pelvic Health Business Grower and Pelvi Biz. Over the last two years, I went from a solo entrepreneur to a seven person team in counting. I'm here to help provide a clear path to grow your pelvic health business.

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What's up guys? Welcome to Pellibiz Podcast. I'm your host, Kelli Alhue. Today we're going to be talking about finances. I get two major questions about finances, a lot, and I want to come on and answer them. So number one, do you pay yourself? And if so, how often? Number two, do you stick to a budget? So let's start with paying ourselves. I think the first thing is just kind of wrapping our head around that we actually need to pay ourselves. A lot of times when we start a practice we're like, oh no, I'll just keep putting money into the practice and not paying ourselves. And the reality is we actually should be paying ourselves because when we pay ourselves, we're setting a higher standard for ourselves to be able to say, I need this to live and this is what I need to make. If I don't do that, then what am I telling myself? Indirectly I'm telling myself, look, it's okay that another month went by and I'm not paying myself and I don't have to push that hard. That's not true. We actually need to be paying ourselves. So number one, I recommend a payroll system. So ADP is one Gusto is one Gusto is a little cheaper than adp. They both provide customer service. You can also, when I first started out, I used zelle, which is thing that your bank has that you can use. And I used to pay employees through that. It got a little confusing once I started having multiple employees, but I at least started out with that and I didn't encounter any payroll fees because when you have a payroll company. So a payroll company means is they will take out a fee. ADP is around like 100 and something dollars every single month. And they just to make a paycheck for your clients, just so you know. Okay. And they will also take out taxes and stuff like that. So that way you don't have to worry about that. And they'll kind of handle if you have any questions about a W2 or 1099. And they do lots of other things. But that's why you want to hire a payrolling system so that you can do those automatic deposits to people's bank accounts because it makes it a lot easier rather than writing 10 checks every two weeks to people. So how do you pay yourself when you pay yourself? I personally pay semi monthly. Okay. So semi monthly, those are the key terms. And basically it's every two weeks we pay out. So it's from the 1st to the 15th and the 15th through the 30th or 31st. So there's two paychecks a month that people will get. You have to put yourself on that payroll. Okay. So and that is included in, in your. I have two categories. You have a fixed category and you have a veritable category on what things. There's expenses that may come in and out of the business. It's not always, you know, one fixed price. And there's the fixed price. The fixed price is your salary. Your salary is not going to change for the year. Okay. So that should be under fixed. Other things that I want to talk about that go under fixed is if you had other PTs or OTs that you're paying. If they are salary, that salary is not going to change. So you're going to put them as that. If they are hourly, they go under veritable to where their salary can actually fluctuate based on the hours that they actually work. Okay, then any admin, if your admin is salary, then put them under the fixed expenses. Also, marketing is another thing. Marketing is another category. So hopefully you guys are writing this down. Marketing can change. Am I putting out ads? Am I printing things? Am I, you know, promoting stuff on social media that I need or promoting things on Google that I need to pay Google for. That may be a veritable expense because maybe it's not going to be the same every single month. Maybe it is. Maybe you just want run one ad and it's the whole thing and then that is what, like it's $50 a month. Ads aren't that cheap by the way. So but maybe that's it. So I'm going to go over what other things are fixed and what other things are veritable. So that way you guys can, when you get home, you can make a list of, hey, this is what I need to do to create a budget. If you. That's where you want to go. Okay, so do you offer employees health benefits? Is that something that's in your package? It may or may not be. What about clinical supplies? So that's veritable. That changes. So put that in that column. What about any like postage? Maybe you got stamps of the post office? That can be veritable. What about rent? That normally is going to be the same. So you want to put that under fixed. Electricity and water. That is veritable. So you can put that under veritable. Like let's just say website hosting, online marketing, website maintenance, that may be veritable. And maybe fix. You're going to have to determine, you know what that looks like. Phone, Internet, cable, all that is pretty much a lot of times fixed. So you're going to put that underneath fixed. The cleaning crew. Do you have a cleaning crew or do you do it yourself? Where does that go? It's pretty much going to be a fixed budget for that one. Do you have, like I said, payroll fees? Payroll fees are pretty much fixed. So you can determine what that's going to be. Liability insurance. What about liability insurance? How much is that going to cost you? That's going to be fixed more than likely workers compensation. If you have W2 employees, you need workers comp. So with that, you know, that's normally fixed price too, depending on how many people you have, like licenses to get your license, how much is that going to be? And that's pretty much fixed and that's a year. Accounting fees you can look at as well with that. But those are the main things. And maybe some education, like continuing ed, you may want to add in there too. Okay, those are the main things that you need to create a budget for. What does your overall budget look like for that? And like I said, you should be paying yourself every two weeks no matter what. So if I had a business when I was just starting out that only made, let's just say $1,000 a month. Okay, I still need to pay myself like $100 of that. Okay, I just need to pay myself a hundred dollars from that. And here's the reason why, why it's really important. Let's just say I was going to try to apply for a loan. They're Going to look at what your income was like over the past two years. And if you're showing that you have zero income, they may actually not give you that loan. Okay. On top of that, you actually need to be in business for two years for them to give you a loan. So you do want to show that you are taking salary from your business. Let's just say I made $5,000 a month, then I would take $1,000 and I would pay myself $1,000 a month. If I was making 10k, potentially I could take 5k a month. If I was making 20k potentially I could take 7k a month. It just depends on what your expenses are and what your profit is. So when it comes to profit, profit, what I mean by that is actually what is left over after you actually pay yourself and pay all those expenses that I just talked about, fixed and variable expenses. That then is your profit, whatever is left over. And from that you can then take, it's called a distribution. You can take a distribution from that that is not taxed yet. And you could write yourself a check. So let's just say I had 10k in profit. That's after I paid myself. So I got my salary. Let's just say I paid myself 5k, which is my salary. I got my salary and now I have this distribution which is left over, which is 10k. So what I can do is at the end of the month, if I chose to, I could write myself a check for 10k as a distribution. That's not taxed yet. It's not taxed yet. It will be taxed at the end of the year or in your quarterly taxes, but it's pre tax. Okay? So I could then take that and put that into my bank account and use that for whatever I mean to use it. Or you can leave it in the business account and let it sit there for. For a rainy day in business. And to make you not have to stress as much about finances when it comes to business. So there's different ways to look at this. So hopefully that helps with finance breakdown and what you should be tracking and how to actually pay yourself. So even when starting out, guys, you need to be paying yourself. The next question is how to stick to a budget. How to stick to a budget. So I think this question's interesting because I could hit it from both ways. So number one, yes, budgets are good because it kind of gives you a target to aim for. But I almost feel like sometimes it can limit your thinking. So if someone's asked me this Question. The question I like to ask back at them is why limit yourself? What is your overall goal? What do you actually want to be making? Okay. Personally, I don't do that much of a budget. Like, I just don't. I mean, I, I know my numbers, but I basically work from the top down. So what I do is I say, okay, I need to make 50k a month so that I can pay payroll and that I can pay my rent and that I can pay for all the supplies. And so it gives me a target to shoot for. Sure. But I don't want it to limit or me to not invest in something for the business because I have a budget, if that makes sense. So let's just say I wanted to. Let's just say I needed to put out stuff for marketing and someone asked me to be a part of their event and a booth was $1,000 because I want to be in budget. Am I going to limit myself from doing a marketing event? No, I'm actually going to say, okay, If I give $1,000 to this venue or this event overall, what is that going to bring me in return? Number one, is my target audience there? So I want to see, is it worth my investment? I'm investing in this booth. Okay. Number two, what are things that I can do at that event that are actually going to attract the clients to me? And then overall, how do I make back the. That thousand dollars, if not more from being at that event? That's what I'm thinking about already. So you need to know your numbers. But I also want you to realize that anything is possible and you can create anything. Like, you can make anything work. Like, take whatever you have, make it work backwards. And if you need to make 60k a month to be able to go on vacation and take care of yourself for your health, well, then make that the priority and say, okay, now how do I make 60k this month and what do I need to do? What do I need to have in place to do that? And how are we going to get there? And then you come up with a plan which then is going to fit into your budget because your, that's your target. And we already know you're hitting your numbers. We already know you're hitting your numbers. So how can you then progress to make profit to overall put that profit back into the business? So I think that's key. So again, I personally don't do too much of budgeting. Like I said, I think you should know numbers. But I think you should ask yourself, why create the Ceiling? Why create the ceiling? I think a budget sometimes puts a ceiling on you. Like, oh, I only need to make this much. So I'm only going to do that. And I think it starts to limit people's thinking on. It's like a small thinking of, like, oh, I only need to just get 15 patients this week because that's what my budget is telling me I need to get. Instead reverse that thought process and say, you know what, I'm going to actually invest either in this, like, mentorship program or in this specialized equipment or something that's big, like a big investment. And then that's going to actually push me to motivate myself more to get more clients. Like, that's how I think. I don't think the small thinking of, oh, my God, I can't go over budget because I need profit. No, no, how do I just get to where I want to go? And then how can I create that and make that a reality? So for those who are like, I have to budget, I have to budget, I would actually challenge that and say, think backwards, start from the top. How are you going to actually create your dream outcome? And then how are you going to actually going to get there, Create that plan rather than thinking, I need to stick to a budget, and then that won't get you there and you won't have to have a budget then, because anything's possible because you can say, okay, I'll just create this, I'll create this, and this gives me the outcome that I want. Okay, so hopefully this helps with finances around money and you know how to pay yourself. And if you are, you know, going back to. If you're just, let's just say a solo. I call them solopreneurs. That's just someone that's by themselves. You're not paying anyone yet. You should be writing a check to your own self. Okay. And that's how you actually pay yourself to show that you're actually getting a salary. And I highly, highly recommend getting a cpa. A CPA is someone that's going to help organize these numbers for you and help you out with taxes. A wealth advisor is someone that's going to help you strategize on, if you have a lot of profit, where to actually invest and put that profit. A lot of times people think their CPA should be strategizing and helping them. Like, oh, if I have this extra profit now, I can invest it in a house. That's a wealth advisor, not a cpa. CPA just organizes the numbers and say hey, this is how much you owe in taxes, and this is how I can help you with taxes. Okay? So that's the difference with that as well. So hopefully you guys learned something today. Go ahead. You can look at your numbers. You can create a budget if you would like, but don't limit yourself to that budget and think, how can I make more money than I need that's going out for expenses, and how do I keep progressing myself each month so that I don't have to create the budget? That's it, guys. So hopefully, guys, have a great night. Bye, guys.

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