A lot of optometrists are guilty of not keeping a close eye on their accounting because it can be tedious and overwhelming. If it’s been a while since the last scrub, cracking open your P&L can reveal striking opportunities to save between several hundred and several thousand dollars per year.
Total COGS Should Be Somewhere Between 20% – 25%
If everything in this guide regarding overhauling your frame and lens supply chain is followed, you should end up in the low-to-mid-twenties. Pivotal Group’s co-founders, for example, were at 22% using the supply chain they engineered for their practice (which ultimately became the supply chain that was rolled out to doctors across the United States via Pivotal Group).
Throw Anything You’re Contractually Obligated to Do Under a Microscope
If a company knows they face such low competition that they force you into order minimums or make you pay a percentage of your gross revenue, they’re likely not serving you as well as a competitor would. If they were truly competitive, the contract wouldn’t be necessary.
Scrutinize Anything Forcing You to Pay a Per-Click Fee
Click fees have become so commonplace in this industry that many doctors just accept them as the cost of doing business. These fees are absolute profit killers that could probably yield much better results if that same time and energy were invested into another aspect of your business.
Other Miscellaneous Expenses You Might Be Able to Eliminate
- Unnecessary or excessive frame purchases.
- Services and subscriptions that aren’t essential or that you can acquire from a competitor at a significantly lower price.
- Practically anything you pay for but can’t remember using in the last year.
- Billing services you no longer use.
- Credit card fees. A 0.2% – 0.5% reduction across all credit card revenue goes a LONG way each year.
- Office supplies purchased by you or your staff.
- Any non critical repairs or maintenance costs.
- Possibly switching your clearinghouse.
- Computer and internet expenses — a common culprit when P&L is scrubbed.
- Bank fees you may not have to pay if you switch banks or account types.
Depending on what you find as you go through this process, you may consider learning how to do your own bookkeeping.
It’s not just about sparing the expense. Managing your own books, even if it’s just once a month, helps keep your fingers on the pulse of your business so that spending never becomes quite so stratospheric again.