More Than "Just Enough"

Let's say you start up a practice that includes other practitioners. They all pay you rent or a split. As the owner, you take care of the "infrastructure" -- paying the rent, hiring and paying receptionists, marketing, furnishings, finding new practitioners when someone leaves, etc. Those "infrastructure" expenses are covered by the rent/split paid by the other practitioners. You also see your own clients.

Should you be making any money from your "owners" duties? Should you only be making enough from the other practitioner's rent/split to make ends meet for the infrastructure/business expenses, your own income coming from your own client sessions?

I'm surprised when I meet people who say yes, that somehow it would be unethical to draw a profit from the work of other practitioners, from the business you started, that you spend time and energy managing. That making money off other practitioners is somehow......greedy, not nice, ooky.

I learned recently of a local practice that has come up hard against this reality. Started many years ago and with a very good reputation, one of the owners wants to retire and would like to sell their share of the business.

Fair enough. The problem is, there's no profit to be derived from buying a share of this business. The owners charge the other practitioners juuuuuuust enough to pay for the "infrastructure" expenses but there's no extra. Consequently, there's no way you'll ever make your money back if you buy into that practice, much less make a profit from it.

A practice has to support itself and its owner. If there's only you, then all the money you  make has to pay your bills and the practice's bills. If you've got other practitioners working for you, the money they make has to pay the practice bills and it has to pay your bills. If you also see clients in a multi-therapist practice, then that money just rolls back into the business.

What does it mean for a practice to "support" you? In addition to paying its own bills, it should generate enough profit to:

• pay your living expenses
• fund your retirement
• create an "emergency" fund for you and for itself
• pay you when you're out sick or on vacation
• cover the "slow" times

That's the kind of basic calculations that go into figuring out how much money a practice should generate. There has to be more than "just enough".