Finance Friday: Why “Doing Everything Yourself” is Costing You THOUSANDS

Mindy:
Welcome to the BiggerPockets Money Podcast Finance Friday edition, where we speak with Amy and talk about entrepreneurship.

Amy:
For the last few years, I’ve really been wanting to start my own practice and I was just doing a lot of research for years, planning. Then finally, I was like, “Okay, I’m going to do it.” So, I have a specialty. I do pelvic health physical therapy, so it’s a little bit of a niche.

Scott:
What would be your maximum potential revenue in a week?

Amy:
$165.

Scott:
So, I’m going to average that out to 15. So, if we have 15 patients times $165 times, four weeks in a month because this is February, it brings you $10,000 in income.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and with me as always is my charming co-host, Scott Trench.

Scott:
Thank you, Mindy. Today’s episode was very therapeutic.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own physical therapy business, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.

Mindy:
Scott, I called you charming in our introduction. You’re not the only charming Trench that I have seen recently. I saw your charming wife, Virginia, and your adorably charming baby, Katie. I am so excited to have met her in real life finally. Holy cow, she’s tall.

Scott:
Yeah, she’s a 95th percentile for length or height. I’m not sure which is the official term for infants there, but yeah, we have a great picture of Aunt Mindy holding her. So, that was wonderful. Her future real estate investor onesie.

Mindy:
Future real estate investor baby Katie. Yes, she is an absolute doll and she had some beautiful gummy smile. So, I’m very excited that you brought her in to see me, only me. Other people got to see her, but I got to hold her and she’s adorable.

Scott:
That was a wonderful moment. So, it was great for her to meet everybody. Yeah, she’s a wonderful, happy, healthy baby. We’re very, very, very lucky.

Mindy:
Yes, you are very lucky because she’s a good sleeper too, isn’t she?

Scott:
She was.

Mindy:
I just cursed you or jinxed you. I just jinxed you. She’ll become a good sleeper again. You know what the key is? Consistency and schedule. When she wakes up, stick her right back in the bed.

Scott:
Mindy, how are your girls doing?

Mindy:
They’re doing okay today. Everybody’s a little bit sick. There’s some nasty bug going around, but they are doing well. Claire’s in high school now, which is shocking. I can’t believe I have a high schooler and Daphne’s in middle school.

Scott:
Mindy gets on pre-recording and she says, “I’m really sick today, but at least my girls are sick too.”

Mindy:
Yeah, so it’s a great day all the way around.

Scott:
I hope you feel better, Mindy.

Mindy:
Thank you, Scott. Thank you, Scott. I’m excited for today’s episode because we are talking to Amy. Amy runs her own physical therapy, a very specialized physical therapy business. We ended up focusing a lot on how she can improve her business and I’m really excited to check back in with her in a few months and see what changes she has made to how she’s running her business. But before we bring her in, let’s talk about today’s money moment. We have a new segment of the show called the money moment where we share a money hack, tip, or trick to help you on your financial journey.
Today’s money moment is do you want to travel for cheaper? Strategize the days that you’re booking. The cheapest days to travel are Tuesday, Wednesday, and Saturday with the most expensive being Friday and Sunday, which makes sense if you think about it. You’re going away on a vacation, you’re going to leave on Friday and come back on Sunday. But if you can change the days that you’re leaving, you could save big bucks. Do you have a money moment for us? Email us at [email protected].
Before we bring in Amy, let’s take a quick break and we are back. Joining us today is Amy, who is married with one teenage son and recently started her own business. Things are starting off a little bit slow, but they have huge potential, but she feels like her spending is a little bit wild, so we’ll be focusing on that as well. Amy, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Amy:
Thank you, Mindy. I’m so excited to be here and Scott. Hi, Scott.

Scott:
Howdy.

Mindy:
Let’s run through your numbers really quick. Amy, I show a salary of $5,400 with additional income of approximately $1,000 a month for your husband’s side hustle and $400 for your side hustle. I show debts of $9,700 of deferred student loans, which will be around 7% when they come back to active, two mortgage payments instead of PMI. So, that’s a really smart move by the way. We’ll talk about that in a moment. $245,000 at 2.8% interest. Yay or 2.875 and $21,000 at 4.875.
Expenses, mortgage is $1,700, utilities around $333, gasoline $286, car maintenance $25, household $200, groceries $700, phone bill $125, restaurants $150, subscriptions $80, gym $75, clothing $200, gifts $210, entertainment $45, insurances both life and car $94, spending on child activities $100, pets $120, miscellaneous $150, for a grand total of $4,594. So, it looks like there’s a bit of a delta between what’s coming in and what is being spent, which is awesome. We have investments of $26,000 in a 401K, $24,000 in Roth IRAs, $15,000 in your husband’s retirement account, and cash savings of about $10,000. So, Amy, what can we talk to you about today? What can we help you out with?

Amy:
Yeah. I mean I would love to be financially independent. I don’t feel like I am shooting for a really fast financial independent. I’m okay with going a little slower. One of my big things is that I started my own business so I could spend more time with my son, just especially through COVID and everything. I felt like those years flew by and now he’s 13. I’m like, “Oh, I need to spend as much time with him as possible.” So, I would like to find a nice balance of making sure me and my family are on the right track. I want us to do well, but I also don’t feel like we need to be cranking super hard to get there.

Scott:
What is your business?

Amy:
So, I’m a physical therapist and so I started my own practice about a year ago.

Scott:
You mentioned a salary of $5,400. Is that pre-tax from your husband?

Amy:
That is post-tax.

Scott:
That implies like a $65,000 salary.

Amy:
Yes. So, my husband actually, he makes $40,000. I’m sorry that’s not pre-tax. He takes home about $2,000 a month and then the rest is me take home. So, that is after all the insurance and all that stuff with health insurance and all that.

Scott:
Okay. So, the goal is we’re fine with the slower path, but figure out how to make this situation work with the physical therapy business, your husband’s income, and accumulate and move towards FIRE while not busting it at any hour work week.

Amy:
Yeah, exactly. Yes. I want to be able to pick my son up from school and to be able to go to his activities, be able to take him to his kung fu classes, all that stuff.

Scott:
Awesome. Could we also hear about your husband’s side hustle?

Amy:
Yes. So, he makes wooden jewelry and so he sells at local growers markets and those sorts of things. It’s seasonal. So, it’s mostly active during the summer and there’s some smaller holiday markets and stuff like that. That fluctuates. This last year, it was quite low, because there was a lot of family stuff going on. So, I averaged it out per month. So, it could be anywhere from $10,000 to… If he really cranks on it, he could probably get to closer to $20,000.

Mindy:
You said he sells that at local markets. Does he have an online presence? Has he started selling on Etsy or does he do anything like that?

Amy:
So, he has his own website, but he has a really hard time keeping up with it. But that is something he wants to do is have a stock of jewelry that he just has a basic set and have that being able to manage inventory and stuff like that. So, he has not spent time on that more recently. Also, he’s supposed to be getting a $15,000 raise hopefully in the next couple months.

Mindy:
Okay. So, when you say he has a hard time keeping up with his website, does that mean that orders are coming in too fast or that the website hasn’t been updated recently?

Amy:
It hasn’t been updated and he also has not been marketing it. So, every once in a while, he will get a couple orders and then he’ll scramble. I hope I have those particular styles and stock and then usually he makes it work, but he also isn’t marketing it that much. So, a lot of people don’t know it exists.

Mindy:
So that is the problem that I see with small crafters who aren’t on a larger site like Etsy. I don’t know bobsjewelry.com exists, but I know that Etsy exists. It can be very difficult to be found on Etsy, but it’s impossible to be found on Etsy if you’re not on Etsy. So, I think that he should explore the selling market of Etsy. Of course, it’s always changing and it used to be better and whatever. I don’t sell on Etsy because I am not creative like that, but that could be an opportunity to grow his business just by being on a place where people are already looking for handcrafted items. So, that’s something to think about, something to explore, and just even having a presence there could be… You never know what’s going to hit.

Amy:
Yeah, that’s a really good point. Yeah, I think he was thinking about Etsy for a while, but he just hasn’t done too much with it this last year. So, yeah, I’ll have to tell him about that.

Scott:
Well, it sounds like he has great product and it’s in demand. I love Mindy’s suggestion of Etsy and I think you could also consider selling it on Amazon and shipping it yourself.

Amy:
Yeah, that’s a really good idea.

Scott:
Let’s zoom back out for a second here. Where do you think are the areas that we should be diving into or thinking through to help you? What specific questions do you have for us?

Amy:
So, I think raising our income is going to be a big part of this. Back whenever I had a salary position, we were much more comfortable and I felt like we were able to put quite a bit more wave in our Roth IRA in our 401K. So, sometimes I look back because I didn’t do what you guys recommend where you say start off your own little side hustle and get that growing a little bit before you quit. I just saved. We stockpiled money and then I was like, “I’m going to go do it.” Then I quit and then started my own practice.
So, we’ve had a big dip in income. Even now, where we’re at now, I’m proud, even though it’s not very good, I feel like right now. So, I feel like everything fell apart, like our spending. So, I feel like we’re scrambling getting our budget in line, getting our income up, and finding a path forward of what to do next, because I’m ready to work on the next thing.

Scott:
Well, the thing that stands out here from what you just said, I wonder if you guys are feeling very uncomfortable because the base salary for your husband is $40,000 and your spending is $4,600 a month. So, that means that you have to have these variable income streams covering that and it averages out and looks good, but that can create some problems there. One thing that I’ll note on your budget is yes, we can go line by line and think through some items. Maybe there’s a percentage to shave off on your groceries, maybe there’s some things to do on the phone bill, maybe there’s some other things in clothing or whatever that you could cut back, but this is not outrageous budget. You’re not doing anything unreasonable here.
It seems very in line with what you’d expect for a three-person household. On the income front, I think the goal the next year should be how do you consistently get to a place where you are easily covering these expenses plus let’s call it $1,000 buffer because you don’t have things in there for the car. You have $25 for car maintenance. The CapEx in your life is going to be more than that. I think that’s also a factor here that we have to acknowledge and be cognizant of, I think. So, I think we should go through these income sources one by one and think through some items. We already talked a little bit about your husband’s wood crafting site hustle. What is his job?

Amy:
So, he has a position at a local university here and he helps run what’s called a maker space. So, they have different machines to help where makers come and can make different things like 3D printers, laser printers, those sorts of things. The problem with that is during COVID when everything was so crazy and we were trying to figure out childcare, it was so nice because that position was perfect, because he was able to work from home and help with school and all that, those sorts of things. I was just working a ton during that time, but now, we’ve come across to the other side and it’s not really helping us anymore. His boss is moving him up to a position. None of these positions are great paying positions even though he does love it.
So, that’s something him and I have been talking about is, “Should you stay?”, looking at different things he’s interested in and maybe looking at other positions. He has been looking at other jobs, but he has a pretty great retirement with them. Let’s see, he has to do mandatory 10% into this retirement account and then they’ll match 15. I think it’s 15%. So, that’s pretty good. Also, the flexibility is nice, but now that I have more time, I don’t need him as much for helping out with the childcare. So, we are in this interesting spot. We haven’t seen it yet, but he’s supposed to be getting a $15,000 raise that will bring us up to around $55,500.

Scott:
Okay. So, you said it’s a $40,000 current, $55,000 in upside if that raise comes through. Then just to help you conceptualize the amount of this benefit, that is certainly a good retirement package, but if we say it’s a 15% match and you’re eligible for all of it, on a $40,000 base salary, that’s a $6,000 benefit. So, a $6,000 raise would in my opinion outweigh that benefit for example. In the $55,000 context, you could just increase everything by like 15, 20. What is $55,000 divided by $40,000? It’s something like that, 30%, 40% more.
I’m probably butchering that math. Instead of a $6,000 benefit, it’s $8,000 to $10,000 benefit. So, that’s how I’d help you quantify that. That way, you can say, “Okay, that retirement is not going to overly weigh on any decisions for new jobs. I’m just going to factor it in and make that a part of the compensation package,” because sometimes people get locked in to those types of benefits.

Amy:
Yeah.

Scott:
Okay. What other opportunities do you think he’d have outside of that from an income perspective if he tested the market?

Amy:
Yeah. Well, that’s the other thing is he would love to go to law school, which I’m like, “I don’t think so.”

Scott:
Would the university pay for that?

Amy:
No, it would not be paying for that. I think it would be $60,000 of just-

Scott:
A year.

Amy:
No, actually, I think it’d be $60,000 total at our local university. So, that would be nice. So, it’s not horrible. He also has been looking at other stuff. He loves fixing cars, so he has been looking at certifications at some mechanic thing. He was for a while looking at this technical certification for electric vehicle mechanic, something along those lines. I can’t remember how, but he has a hard time picking something. So, he changes his mind frequently, but he is open to it. I think I have to encourage him to pick something.

Scott:
Okay. Then let’s go through your story here. Could you walk through what you were doing last year when you were working a ton as you mentioned and how the transition to your new practice got started?

Amy:
So, I was working at an outpatient hospital system. It was a mixture of outpatient physical therapy and inpatient physical therapy. So, it was a little bit of both. It was after COVID started, we just got super slammed. The hospital system took away some of our benefits and started pushing productivity a lot more. So, we were just working a lot. For the last few years, I’ve really been wanting to start my own practice and I was just doing a lot of research for years, planning. Then finally, I was like, “Okay, I’m going to do it in March last year.”
I think it was August 2021. I stopped contributing to retirement and just started saving money in our savings account and then put my notice. I did stay on PRN, which is that little bit of money I’m getting through my PRN job at the hospital system, but I quit and then just started renting a room and seeing patients out of that room.

Mindy:
How are you getting clients now?

Amy:
So right now, it’s a mixture. So, I’m getting clients based off of my Google Business. So, people are finding me online. So, I have a specialty. I do pelvic health physical therapy, so it’s a little bit of a niche. So, that is nice. I’m not just doing regular ortho PT. So, I’m getting quite a bit of patients from a birthing center and also from some other chiropractors, acupuncturists that I’ve just built connections with. Most of my people are coming for me Googling pelvic floor PT near me. Then I also am finally starting to get some more word of mouth people. So, people being like, “Oh, I went and saw Amy and she helped me after I had my baby or after my hysterectomy, Amy helped me.” So, I’m finally getting more of those, which is really good. So, it’s a little bit of a few different places.

Mindy:
Is that the only thing you do? Is that super specialized or do you do a variety of physical therapies?

Amy:
Yeah, so I market pelvic health, but I will see someone if they have a neck problem or a back problem. One of my patients, I’m seeing her dad for his shoulder. So, I do accept other people unless I feel like they would be better going to someone else.

Mindy:
I’m assuming you have a website yourself as well.

Amy:
Yeah.

Mindy:
I’m wondering if there’s an opportunity for networking with other PTs so that they know that you’re out there. So, that when somebody comes to them with this issue and also with OBs and I mean with OBs and birth centers and the whole birthing doulas, connecting with doulas and midwives and everybody in the birthing process. Hey, I just wanted to let you know I do this. Do you have a brochure? Do people hand out brochures anymore?

Amy:
Yeah, I have brochures still. Sometimes I usually try to have my cards, my brochures with me and spread the word.

Mindy:
Because it seems like a little bit of outreach, that could yield so much back. Because it’s a specialized thing, I would imagine that you don’t have a lot of competition.

Amy:
So, in my area, there are some other pelvic floor PTs in my area, but there’s not that many of us. It is quite a huge need. A lot of people don’t even know it exists, but I think it’s starting to become something more common that people know about that they’re looking for.

Mindy:
On your website, do you educate people for why they would need this? Not only do people not know what this is, I mean there’s a lot of women who don’t even know all the things their body does and don’t know about the birthing process and that there could be an opportunity for this afterwards. Writing blog posts about what you can do for people like an educational piece on your website, YouTube videos, just talking into a camera. This is why you need physical therapy, or hey, are you having these symptoms? Just getting the word out there that this is a thing and that you can help them.

Amy:
Yes, that is always the challenge of telling people that there’s help for what they’re dealing with. So, typically, on my website, I’m like, “If you’re experiencing urinary incontinence, pelvic pain, prolapse,” I usually am just listing all those things out. Then in another part of my website, I say I treat these conditions. One of my goals this year is to do more workshops. So, I’ve been contacting yoga studios, those sorts of things, seeing if I could get in there, see if I could get in front of their clients to host workshops. It’s a little harder than I thought. I’m also a little introverted, so definitely, this year, I need to get out there in front of more people more. I think the YouTube videos are a good idea, because I think that also helps with my website SEO is having them connect back to my website.

Mindy:
Any social media presence, Instagram, Facebook ads, just getting the word out there that the symptoms that you’re experiencing are not normal. There is help, there is a cure, or whatever phrasing you want. I’ll leave the messaging up to you, but just having that out there because there are women who are like, “Well, I guess this is just how I am now. After having a baby, this is just what it’s like.” It doesn’t have to be. Yeah, that’s interesting. I would love to see you brainstorm different places like yoga studio, what a great idea. Brainstorm different places to network, and then once a week, send out an email or twice a week send out an email to 10 companies. Hey, this is what I do. This is how I can help your clients. I’d love to come in and chat.

Amy:
I like that. One thing that I do, self-pay. So, I don’t accept insurance. So, that has a lot of potential. It allows me to see a lot less people and to spend more time with them. Part of it is telling people why they should not use their insurance to come see me, which is tough. So, I’ve been working on that too is just explicitly telling them when you work with me, you’re not working with anyone else. You’re spending this whole, that thing, the benefits of working not in network.

Mindy:
It could be beneficial to have someone like a writer help you craft that message because it is difficult to get over the whole, “Oh, well, I can’t use insurance. Forget it, I’m done.” That’s a big hurdle. So, here’s why it’s a good idea or here’s why that’s beneficial to you. Having somebody who can help you craft that message could be really helpful, really powerful.

Scott:
Amy, how many hours per week are you willing to work and what is your hourly rate that you charge?

Amy:
Are you asking how many patients am I going to see a week or how many hours total, not including patient care?

Scott:
I’m trying to figure out the ceiling for revenue for your business. If you were to fill up every available slot, if you were to optimize your business, what would be your maximum potential revenue in a week?

Amy:
Yeah, so I’m willing to see around up to 20 patients a week. Well, I charge a little bit more for the evaluation, but then the follow-up visits are $165.

Scott:
So, you could do 20 $165 appointments per week and your schedule would bear that and you would be able to pull that off. How many hours would that take you to do that? Is it 20 hours? Is that simple, plus the administration overhead?

Amy:
Yes. So, it would probably be about 40 hours total if I was just with all the admin work and all, because I’m doing all the marketing. I have to do documentation and admin like calling people back, emailing people back, those sorts of things. So, I’m not exactly sure if it would be 40 hours, but I’m guessing it would be about double including all the extra admin work.

Scott:
Okay, great. So, we could see a maximum of $3,300 per week in revenue for this business if we just do 20 times 165. How many patients do you see on an average week? How many did you see last week or will you see this week?

Amy:
Yeah. So, last week, I saw 16 patients, and this week, I’m going to see 14 if I don’t get any cancellations.

Scott:
Okay. So, I’m going to average that out to 15. So, we have 15 patients times $165 times four weeks in a month because this is February. It brings you $10,000 in income. Are you going to see $10,000 in income in February?

Amy:
No, I’m not. Well, my expenses I don’t feel like are huge and I wrote down some of my expenses since September because it fluctuates. Last month, I had $5,000 worth of expenses, which is the most I’ve ever done. But that’s because I had to pay sales tax for the last two quarters because I got behind, but this month, I’m going to have $2,700 in expenses.

Scott:
I could say that we’re bringing in $5,000 a month right now in revenue. So, your husband brings 40 grand a year and you’re bringing in close to 60 grand a year on top of that likely in a normalized state. So, we’re actually in a pretty good spot here with that. Let me ask you this, if you were to take care of administration, if I could wipe that problem out for you, how many patients would you be willing to see in a week?

Amy:
Oh, I’d probably be able to see 25. I don’t know if I’d necessarily want to see more than 25 or 27. Definitely no more than 30, but it would be much easier.

Scott:
I love the things on marketing. We do want to fill this up to 20 patients a week and there should be some of that, but you are not far away from being full on your plate here. This is how I think about every service, every solopreneur service business is volume times rate. How do I fill up on my volume? What’s a competitive rate? Then how do I make sure that essentially every moment that I’m working is spent on the actual revenue driving activity of seeing a patient? Because your time is worth $165 an hour and an administrative assistant’s job is $15 to $20 an hour. You wanted to spend more time with your son.
I see an opportunity there. Can your son book the appointments for those things? Can you pay him $15, $20 an hour to help you with all of that stuff? Maybe he can’t do marketing. That sounds like a very difficult challenge for a 13-year-old boy to handle in your business, but perhaps he could set the appointments and do those types of things and get you closer to that 25 patient per week.

Amy:
That might be it. The only thing is I think you would have a hard time booking new patients trying to talk to them about leaking and-

Scott:
Fair enough.

Amy:
… constipation.

Mindy:
Yeah, that’s what I was going to come in. I don’t think that that’s necessarily the best use of his time, but I bet there’s other opportunities for him to help out.

Scott:
I agree. Now I think I was very stupid. Sorry.

Amy:
No, it’s fine.

Mindy:
Now, what about your husband? I can see a lot of women being very embarrassed.

Amy:
That’s another thing is we even thought about maybe my husband can step in and try to help out with some of this admin stuff more and maybe that would be worth more than him if he can still keep his current job and find ways to help me out. It would make sense, we could make that work. I do work mostly with women but I’m not sure if they would be okay with talking… My husband’s very approachable and very nice so maybe it would work out, but I thought they might-

Mindy:
I’m going to say that you’re biased because he’s your husband. If I was your client and I called up or a potential client and a man answered the phone, I may not continue calling or continue talking to him. I may say wrong number or just hang up. In your field, I don’t go to a male gynecologist. No uterus, no opinion. I just go to women. Sorry, Scott. I would want you to have a female receptionist to do the bookings.

Scott:
I think that I completely agree with that in his business.

Mindy:
That doesn’t mean that there’s other jobs that they can’t do. I completely agree with what Scott’s saying. If you can make $165 an hour, then you should not be spending your time on $15 an hour jobs. Even high school students come in after school and work for three hours calling patients back and scheduling appointments or work from home and call people back. There can be a lot of opportunity to do things like that where you’re spending a lot less money. Even though it’s money going out, you’re now able to do more $165 an hour jobs.

Amy:
Right now, I do have one of my friend’s daughters who is a senior in high school and she is doing my laundry for me. So, that’s been really nice to not be taking five bags of laundry home every two days. So, that’s been really nice and I have been thinking about maybe using her. So, maybe I could talk to her about it. She’s like Gen Z, scared to talk on the phone type of a person, but I might be able to train her. We’ll see. We could role play.

Scott:
This might be a great opportunity for a retiree or something like that as well who wants to make some side income in that. Yeah, I agree now, obviously with this business, I think that that makes sense to have a female receptionist, perhaps someone who can empathize to some degree with the patients might be really good requirements for this one. Yeah, I think you should sit down and say… How long is a session in your business?

Amy:
I have one-hour sessions and two-hour sessions, mostly people coming from out of town that they might have a two-hour session.

Mindy:
I would potentially suggest and I’ve seen a lot of physical therapists because I gotten injured in rugby so many times with this, but I would potentially suggest a 50-minute time slot, which I think is probably consistent with what you see with a lot of folks. That will give you 10-minute times between sessions or even 55 minutes. I think it would be a game of Tetris from scheduling. You should be like by the end of this year, I’m going to be working 25 hours a week or 30 hours a week or 35 or whatever it is. 90% of that is going to be seeing patients, boom, boom, boom, boom, boom, boom, boom. I’m going to be going in.
In between, I’m going to wash my hands, take a sip of water, have my 20-minute lunch break and I’m going to crank this thing out while my son is at school for example. That is going to fill up my entire day and I’m going to optimize for that. Everything that is not seeing patients or getting new patients at least at first is eliminated. There should be somebody at the front who is booking my patients. There should be somebody who is ideally in marketing.
One idea as well is again, this is the chiropractor that I go to so I don’t know if it’s similar but they have three chiropractors in their practice. They all own the practice and that allows them to share marketing and overhead costs with that kind of stuff. So, you said you have competition. Maybe those other folks are also struggling with that, but together, you could essentially book up your entire schedules because it’s really just the amount of hours you’re working times the rate and maximizing it. If you just share the overhead, you could even get an office or something like that to do something like that with two or three partners. How are those for ideas?

Amy:
Yeah, I love that goal just saying by the end of this year, I will be working 25 hours just seeing patients. That sounds amazing. I hate all the admin stuff. One thing I was considering is eventually, once I am full is hiring like another PT. So, I don’t know how that would go versus having a partnership with a couple other PTs and sharing the overhead or would it be more beneficial maybe to hire someone to also see patients at that rate?

Scott:
My instinct is this is going to be a very difficult business to scale and sell because it is a service. Why did you leave your role and go out on your own? How are you going to solve that problem for the next excellent PTs with that? It can be done but I think that will be a big challenge in this line of work.

Mindy:
Yeah, I think that the partnership versus the hiring somebody, how hard is it to train somebody in this? Is this a specialty like doctors have specialties or is this something that you would train them on the job thing?

Amy:
So, it is a specialty. You don’t have to do a residency like MDs do to do this. It’s something that generally takes a few continuing education courses to become pretty good at it and then just experience. Then I would be doing training on top of that as well, because if I did hire someone, I would want them to be providing similar, very quality care. So, there would be a lot of training involved.

Mindy:
With something like this that is so personal and so specialized, I would almost want to hire to partner. You hire me to come in and work and you discover wow, Mindy does not have the same bedside manner and all of the people that are coming here and see her don’t come back. She’s not a good fit or Mindy is amazing. She’s the exact same person that I am. She is such a perfect fit. I want to approach her for a partnership, but I would start with hiring because it’s easier to fire an employee than to separate a partnership.
I would even consider a sharing of the office space rather than a partnership with other people that are in the similar field just to gather up everybody in one location. Then if you aren’t available but Barb is, you can say, “Oh, I’m not available right now but Barb has an opportunity to see you today,” because you need to get in or whatever as opposed to an actual partnership because maybe Barb has a very different bedside manner that works great for her clients but not yours. I think you should be very slow to enter partnerships.

Amy:
Yeah, that makes sense.

Mindy:
But I mean this is all homework and things to think about. What does an ideal partnership look like to you and what does an ideal employee look like to you? Really think about this, because I don’t think right now is the time for you to jump into a partnership but maybe by the end of the year. So, start thinking about what you would want out of this. I see a lot of people, especially in the BiggerPockets forums, which is not related at all to this, but they talk about their partnerships and they’re like, “Hey, I have this terrible partnership.”
You read a little bit more and you’re like, “Well, because you jumped in with both feet and you met this guy at a bar yesterday. You went into a partnership with this person and you didn’t know anything about them.” So, I think a business partner should be absolutely like your relationship partner. You don’t get married after meeting somebody for five minutes. You shouldn’t be in a partnership with somebody after meeting them for five minutes, but just like think what do you want in a partner and go from there.

Amy:
That makes a lot of sense.

Scott:
I think if you want to go to the business route, it’s not impossible. I don’t want it to completely turn you off to the idea. It is just you would need to solve the problem, “What would I join right now?” If someone offered this to me, what would solve my problems and why would I stay with them for 5, 10 years? Because you’re going to have make money off of your physical therapists. So, you’re going to have to take that out of their margin.
Therefore, you have to make it. If you can create a system that keeps them fully booked all day long and there are overheads there and they’re able to make 80, 90% of what they charge with that or some high enough percentage that that’s worthwhile, they don’t have to worry about anything other than just treating patients and having them come back and like them. Maybe you can get there and that has been done and could be repeated by you, but I think you have to solve that for yourself first. If you can solve it for yourself, maybe you can solve it for the next person and then begin scaling there.
It’s about if you can get the patients and you can have somebody else handle the admin, so you’re just treating folks, if you can get there by the end of this year, you’re going to be bringing home $150,000, $160,000 a year. That’s a tall order. That’s a great project for this year and you’re not that far away from it. That’s less than doubling your current patient load. I think it’s very achievable if you make the right connections and do the right marketing. One last thing on my spiel here, I wonder if social media is going to be an effective marketing tool in this context. It might be helpful to have a social media and a website that looks professional so folks can check it out, but your clients are going to be regional.
They’re going to be having a very specific set of issues that they’re dealing with that are likely going to come from referrals I think from the local hospital or friends and family or a network that’s going to come in there. So, I wonder if from a marketing perspective that those would be the places to try. How do I become friendly with the nurses? Because those are the ones that you spend all the time with that can maybe help me with that.
Is there a referral fee I can pay? Can I just be nice and have relationships? What are the ways I can get tapped into the right networks that will give me a flow of clients instead of maybe whatever? So, Caitlin, our producer, gets 100 bucks every time she refers someone to her dentist. Is that something that can happen with your patients? Yeah.

Amy:
I do have an OB-GYN who knows me from my old hospital system job and she does send me quite a bit of referrals. The only problem is that a lot of times, I find those referrals are wanting to be a network with their insurance. So, I’ve been trying to get a little bit more with other practitioners in town who work with people that I want to work with who have a similar business model to me. So, that’s something I’ve been trying to do. I mean the state I live in is not a super wealthy state. It’s quite a poor state actually. So, I know it can be done but it’s just not one of the bigger cities that people are used to having a little bit more money and paying out a pocket for stuff like that.

Scott:
That’s another vote for a partnership. If you have a partnership, then whatever costs associated with dealing with the insurance company from an admin perspective can be shared by one person at the front desk who can take the calls and then when they’re not coming in handle all of the issues that go along with taking insured clients. Has this been helpful?

Amy:
Yeah, it really has. I do have one more question. This happened just two weeks ago. That was before. So, we had to unfortunately take out a car loan because my husband was in a minor car accident that his car is away. So, now he used that excuse to get an old Toyota Tacoma. So, now, we have a $13,000 car loan, which I’m really bummed about, because we’ve been pretty much debt free besides these student loans for a long time. So, I think it’s about $350 a month. So, I don’t know. Should we be really just paying that as soon as possible?

Mindy:
What’s the interest rate on that?

Amy:
It is 13,000 at 6%.

Mindy:
6% is that squidgy area where Scott is unsure. Do you hate having debt or are you not so upset about it? It sounds like you don’t really love having debt. If you have extra money to throw at it, maybe you do that or maybe you put it into a bank account and have it there to pay down, but also, it’s available if you need it.

Amy:
Well, yeah and that’s the other thing, because our emergency fund is about $10,000 right now and I’ve been trying to build that up as we’re finally I think more cash positive these last couple months. So, I like that idea is putting it in a bank account.

Mindy:
I mean because bank accounts are paying like 4, 4.5% percent now. So, you’re still paying more on the loan than you are earning on the bank account but you have the ability to access that bank, that money if you need to. If the debt keeps you up at night, then pay it off.

Amy:
Okay.

Scott:
Yeah, I think there’s no right answer. You’re in a no man’s land where it’s high enough where it’s like ugh, that is unfortunate. 6% is tough at least especially in the context of what we’re used to seeing for the last 10 years, but it’s not so high that you couldn’t beat it if you wanted to invest for example in even long-term index funds. Who knows what they’re going to do for the next couple years? But historically, you can often get 7 to 10% returns in there. Yeah, I think as my mom used to say, six is one half a dozen or the other.

Mindy:
Okay. Well, Amy, I think we gave you a lot of things to think about. I would love for you to reach back out and check back in with us.

Amy:
Yeah, definitely. Thank you guys so much. Hopefully, I’ll be 25 patients. I know it doesn’t seem like that much but it just seems like an insane amount to me even though it’s not actually that much.

Scott:
It’s a fantastic living if you can max that out and set up the systems and you’ll like it more, I bet, if you’re just doing what you’re wonderful at.

Amy:
Yeah.

Mindy:
One last thing, you don’t have to go from doing everything yourself to only doing patient clients or seeing patients. You can slowly remove things out of your plate. As you get busier, take things away and find a really great receptionist. Pay that receptionist well so you don’t have to constantly be training them. You’re saving a dollar on their annual salary but then you’re training them every six months because they keep leaving.

Amy:
That’s a really good point.

Scott:
I’m going to change something. I would definitely experiment with administrative assistant, a receptionist who can help you with this before paying off your car loan. That is likely to be a way better return for your business. You don’t have to hire them because you don’t need them full-time yet. But if you can get a part-time person to come in a few days a week when you’re booking all your appointments and stack them, if you can just get to Mondays are totally full for the hours that you want to work with clients back to back and you can do that by the end of the quarter, that would be absolutely fantastic.
Then you can fill out Tuesday, then you fill out Wednesday, and then you can hire this person those whole days. When that gets going, they can start taking on all of that stuff because they’re going to have time. That would be a much better investment I think than paying off the car loan early.

Mindy:
Yes, I agree completely.

Amy:
Yeah, definitely. I like that a lot because I feel like there’ll be a lot more benefit. Yeah, it’s just scary. I don’t know why it freaks me out a little bit to hire someone.

Mindy:
Baby steps.

Amy:
Yeah, baby steps.

Scott:
Make it a contract at first and get really clear on what you want them to do from a duty standpoint. See how it goes for a couple of days or maybe a month or two and then make it a part-time employee or a full-time employment deal, but that would be how I start and it’s low risk there. If it doesn’t work out, you just don’t renew the contract.

Amy:
So, I could do a contract for four weeks.

Scott:
Sure, you could do a contract that’s hourly. I’m going to pay you $30 an hour and you might pay a little bit more than you would like a full-time rate, but you could pay for example, $30 an hour for one eight-hour day. That’s 240 bucks. That’s two patients. So, see how that goes and then try it on and figure out if you want to keep doing that.

Amy:
Okay, great.

Mindy:
I like the way Scott just framed that that’s eight hours of work for one person and two patients for you. So, start looking at it in how many patients am I going to have to see in order to cover this cost? Oh, one more patient. Now, I have four hours of work and all of my documentation is done for today or all of my billing is done for this week or all of my booking is done for this week.

Amy:
Yeah, that sounds great. That’s a really good idea. Because sometimes I don’t call people back fast enough because I’ve been in with patients all day and then they said, “Oh, I booked somewhere else.” So, I feel like it might even get my schedule more full, because people aren’t waiting as long to hear back from me.

Mindy:
Yeah, exactly.

Scott:
If you try booking with the folks that’ve been business for a long time in your area, that would also be really good customer research and say, “I want you to answer the phone exactly like this.” If you want to even look at another city because you don’t want to feel like they know, you just call them up and say, “Hey, I’m trying to book here. How does that work?” I bet you that you’ll find somebody that has a really good system set up, a calendar software, a receptionist who’s going to pick up the phone in the first ring, or has a really friendly voice, especially during business hours.
That will be really good, easy way to learn. Now you can write your one or two-page contract and job description in a way that is more prescriptive. That’ll be the hard part for you is learning how to describe exactly what you want and enforce that with a contract hire and then ultimately a part-time or full-time employee.

Amy:
Yeah, definitely. I think I will have to come up with some script, because it’s not easy to get people to book.

Mindy:
All the work you’re putting in upfront is going to make their job easier. You’re going to be less frustrated. When you’re not frustrated at your job, you’re not thinking of quitting.

Amy:
Yeah.

Mindy:
Okay, perfect. Well, Amy, thank you so much for your time. This was a lot of fun and I’m serious, I want to check back in with you in six months and see what has happened.

Amy:
Yes, I definitely will. Thank you so much, Mindy and Scott.

Mindy:
Thank you, Amy. We’ll talk to you soon.

Amy:
Yes, I’ll talk to you soon. Bye.

Mindy:
All right. That was Amy. Scott, I think you had some really great advice for her. I think that entrepreneurs are either too quick to hire or too slow to hire and I think she’s in a really great position right now where she can start to think about hiring and I think we had a lot of great advice for her on what to look out for and gave her some homework to consider.

Scott:
Yeah, I thought you had really good advice as well, Mindy. I think this was a good discussion here. The term I would love folks to take away from the discussion, the tool that I used to talk through some of those points is called unit economics, right? So, a patient charges 165 bucks, there’s a cost associated with that. Some of it’s administrative, some of it’s the specialized care that only Amy can give. Some of it’s the rent that she’s paying either for her house or the office space that she’s leasing, all that stuff.
What are the unit economics there and how do you maximize them? Some of those are fixed like rent that you have to pay every month. The more patients you see, the lower it is per unit. Some of them are variable like her time with that. The key to a services based business is to maximize the volume and minimize the overhead and spend as much of your time as possible on patient care.

Mindy:
Yup, absolutely. I mean that’s the whole point of the Finance Friday is to give our guests a different way to look at things. I think you opened her eyes with that and now she’s going to be thinking about, “Oh, how many hours is this going to take off my plate? So now I can see more clients.”

Scott:
There are hundreds of people in her local market, I guarantee you, that would be absolutely thrilled and delighted to have a $30, $25, $22.50 an hour job that was in an environment like that, that’s helping people achieve good outcomes. I’m sure she would be thrilled to have a much greater income only doing the thing that she loves doing and is trained to do.

Mindy:
Yup, absolutely. When you first start out, you have to do it all yourself, but you can quickly shed responsibilities, those $10 an hour jobs, $15 an hour jobs so you can focus on the high dollar jobs. All right, Scott, should we get out of here?

Amy:
Let’s do it.

Mindy:
That wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench and I am Mindy Jensen, saying chop chop lollipop.

Scott:
If you enjoyed today’s episode, please give us a five-star review on Spotify or Apple. If you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Caitlin Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.