How Long Before Your Practice Runs Out of Money?

Let’s say your practice saw the last patient today for ever. After that last one, no more patients will come see you again.

How long before your practice runs out of money? 

A month; a day; 3 months?

This is a very important question to answer. Why? Because it helps us have a perspective on the business and when and how to start making decisions.

In the How The Mighty Fall: And Why Some Companies Never Give In Jim Collins talks about how companies start to fall apart way before they actually fall apart. Like a disease that starts to affect the body before symptoms are visible, many companies start the decline before the leadership even is able to make a diagnosis. And often times, by the time the leadership realizes there is a problem, it is often too late.

Imagine not having a gauge in your car that tells you how much gas you have left. How will you know when to stop for gas? I guess you could make it habit to put gas in your car every couple of days. But that isn’t very efficient.

Like the gasoline gauge in your car, knowing how long your practice can go before it runs out of money will help one prepare way before it is too late.

Take a moment and figure out how long you could make it if you ran out of patients today. Then, you can decide whether or not you need to increase your line of credit or start an emergency fund.

But more important, the exercise will be like a gasoline gauge in your car. It will give the leadership of the practice a visual display of sorts to assess the current condition of the practice.

Knowing this information also helps you and your practice get in gear. In other words, when you see the reserves drop, you can go into reverse course mode and start going down a path towards recovery (e.g recalls come to mind, delaying large expenses or cutting back on expenses) before it is too late.