It is true to say that if you can’t measure it, you can’t manage it. I am a firm believer that for effective management, you need the right information, in a format that you, as an optometrist, can relate to (not accountant speak), at the right time, in other words, fresh. This will ensure that you can convert your turnover into the maximum net profit, which is not a given, because there can be, and usually are, many leaks along the way. This is very possible with Humint online software for optometry, and you don’t have to be an accountant to do this. The possibilities for reports that can be set up in Humint are endless, as indicated below.
This may seem overwhelming, but you can figure out what is most important in your business. All these management tools will enable you to get an exponential return on the monthly fee you pay for Humint.
Let me elaborate on just one as a management tool.
Average Invoice Value
This is a monthly or running average of every transaction, from a spec chain to a high-priced pair of specs. Monthly turnover divided by the number of transactions. Over time, this number becomes meaningful. The number represents what a single patient, on average, is worth to you. It should be noted that this number can vary significantly from one mode of practice to another, such as malls, strip malls, shopping centres, and rural areas. But it is your number over time that matters.
Sales information
This is a good indicator of how well a staff member or even yourself is selling. A rookie staff member may fall into the trap of offering the use of the patient’s own frame, which can drag the average invoice value down. It can also act as a target to improve the profitability of your practice. It is possible that you are not selling enough photochromic multifocal lenses. By targeting products in higher price categories and higher margins, a big difference can be made to your average invoice. The bottom line is that whatever your best salesperson is achieving, everybody else should be able to equal.
Business Plan
Every business should table a plan every year, even a small practice. If you don’t plan to grow, you will grow poorer every year as inflation erodes your buying power. Let’s say the turnover is R400 000 per month. You now project a 20% increase year-over-year. That’s R80 000 more. How is this going to happen other than just a thumb suck number? It becomes a lot more tangible if one can convert this to the number of patients it equates to. Let’s say my average invoice value is R4000 per patient. I can now calculate the number of patients it will take. R80000 (20%) divided by R4000 equals 20 patients per month, or divided by 26 days comes to 0,77 or 1 extra patient per day. Now, my focus is on the measures I can implement to achieve a more tangible target. I need one more patient per day. Perhaps focus on personalised recalls or engage social media marketing, or follow up on the no-shows.
Consider a price increase across the board to raise the average invoice amount. There are only three levers to increase a business’s profitability.
- Increase price
- Decrease cost
- Decrease the cost price of products
The details are in my book, Navigating the Business of Optometry, but it's safe to say that if you increase your price across the board by 1%, you will increase your net profit by 5%, assuming the other two levers remain the same. Alternatively, by increasing the price across the board by 5%, you will increase net profit by 25%.
If Humint online software for optometry is used purposefully, it can give an amazing upside to your practice. Measure it, then you can manage it to improve it.
Reports
- Average turnover per patient (average invoice value)
- Stock-take variance.
- Number of consultations
- Number of new patients
- Referrals from doctors
- Number of single vision Rx
- Number of bifocal Rx
- Number of multifocal Rx
- Number of contact lens patients
- Clear vs photochromic
- Top 20 medical aids by sales.
- Remakes as a percentage of turnover.
- No shows – patients who didn’t show up.
- Sales per staff member.
- Frame sales analysis.
- Lens sales analysis.
- Stock value.
- Late job report (date promised).
- New patients seen.
- Walk-ins – patients seen without an appointment.
- Private patients versus medical aid patients.
- Debtors’ age analysis.
- Sick leave taken (all staff ).
- Empty chair slots.