The biggest threat to the success of your practice:
What you don’t know you don’t know

BY CHRIS FAUL

“True knowledge exists in knowing that you know nothing” – Socrates

As a graduate, you probably feature in the top 10% intellectually in the world. Yet, there is so much we don't know about the world we live in. Do I know how a light bulb is made? How does WIFI work? What are the biggest contributors to climate change?

In our general sphere of existence, there is the stuff we know, such as reading and writing, and there is the stuff we know we don’t know, such as perhaps, doing a tonsillectomy, or flying an aeroplane, but then there is the stuff we don’t know we don’t know. This is the stuff that can hurt us badly in business. 

For example, gross profit percentage. You have heard of it, but you don’t know, you don’t know the many factors that can affect GP%. These are the factors you should be controlling because they can erode your net profit. If we don’t know what it is, and if we can’t measure it, we can’t manage it. We won’t realise that it is one of the things in business which poses a very big threat to profitability. For example, the factors that influence the gross profit percentage can only be managed by those people working in the practice, and not by the bookkeeper or auditor who reports on what has happened in the business. But this does not only apply to the GP%. Many elements in a business can fall into this category. Some are listed below. 

What you don’t know you don’t know

• What is my GP%?

• What percentage of net profit did I make last year?

• What turnover am I going to make this month?

• What is my rent as a percentage of turnover?

• How much stock do I carry right now?

• What are my expenses as a percentage of turnover?

• What is the value of my average invoice?

There is a tendency among healthcare professionals to abscond from the responsibility of financial management of the business. If one shies away from it, one increases the odds of there being many issues you don't know that you don't know about. I am not suggesting that every optometrist should also be a hands-on financial manager, BUT you should at the very least in terms of the business, be in the category of, I know I don’t know. Then you at least know about the potential dangers lurking that can vaporise your net profit from under your nose. The key to taking control of the financial well-being of your practice is to have the right information at the right time in a format that you, as a clinician, can relate to. This is what Humint O software can do for you, plus Hufin can take care of your accounting needs in a format that you can relate to.