According to the 2022 AOA Survey of Optometric Practice report, the average optometry practice in the U.S. generates around $850,000 in annual revenue per provider. This makes sense when you consider most practices are owned by a single OD who provides 100% of the clinical care in the practice. Because many ODs have a difficult time delegating, there becomes a limit to the amount of productivity that a practice owner can achieve.
A well-utilized OD should actually generate $1,000,000 in annual practice revenue based on five days a week of clinical care. That assumes 10 comprehensive exams per day, generating $400 in revenue per exam. Since most ODs hold onto many administrative tasks, that leaves about four clinical days of patient care per week, with one day per week spent performing administrative tasks. Using the above assumptions of productivity, you can see why many practices get stuck at around $800,000 in practice revenue. By carrying the burden of providing clinical care, along with many of the administrative tasks of the practice, OD-owners limit their capacity and ability to scale their practices, never achieving the arbitrary holy grail of $1,000,000 in annual revenue.
Unfortunately, most ODs don’t own a business — they own a job. While their practice provides a great income, the business itself generates very little profit after compensating the owner. Consider what happens when you take a two-week vacation. What happens to your practice revenue? And how about your expenses? Your vendor bills from the previous month would still pile up, your team would still expect to be paid, and your landlord would expect the rent check.
Because the economics of our businesses are built assuming we are providing care at maximum productivity and availability, a two-week loss of patient revenue has a painful impact on our bottom line and personal pocketbook. Worse yet, what would happen if you became ill or took an extended absence from your practice? Could your business survive 30 days, a full business cycle, without you? If not, you’ve created a business that is too dependent on you. The more time you give to your business, the more reliant your business will be on you. Your goal should be to begin to build a business that doesn’t need you, one that can survive forever without your involvement or influence.
Build Around Systems
In the early years of practice ownership, it’s easy to build your business around key employees. You may find relief in finding team members who you can trust and are happy to delegate some of the tasks that you don’t enjoy doing. After all, they reduce some of your stress and burden. Unfortunately, without a Systems-focused approach, these individuals store critical knowledge about your business inside their own heads. Once these key employees leave your business (almost all employees eventually leave), the core knowledge of your business goes with them. When your business becomes overly dependent on people, and not reliant on Systems for sustainability, you set yourself and your business up for failure.
Systems don’t replace people — they empower people to create consistency. Systems represent the step-by-step processes, procedures, set of rules, or directions that work toward a common goal to produce a positive outcome. They are a series of linear steps that, when followed, produce a predictable outcome. The best systems are easy to understand, transparent, automated, and in a tangible format. They increase efficiency, reduce mistakes, increase scalability and create consistency, all necessary for a business to sustain itself without you.
There are two elements of every system: Process and Format.
- Process: represents the “how to” of a system. This is the actual process used to accomplish the system. The process is what and how to do something. It includes the steps or instructions required to accomplish the task.
- Format: represents how the system will be stored or designed. It could be a checklist, spreadsheet, recipe, bullet points, an office form, a script, etc. The format is the form in which the system lives. It’s how you package the system to your team.
For clarification, systems are not a policies and procedures manual. Systems are intended to be living, breathing documents that are frequently amended and updated based on the changes that are occurring as your practice grows. The best test of a system is to ask yourself: Is my team using it? If not, it’s probably a bad system, or you have not effectively educated your team on the importance of utilizing the system.
Steps To Creating a New System
Follow this step-by-step approach (system!) to create new systems within your practice:
Step 1: Clarify what you are trying to accomplish or what problem you are trying to solve.
Step 2: Determine the best method for capturing the process and create it. Ask yourself the following questions:
- What really matters (Step 1 above)?
- How can I reduce the number of steps?
- How can I reduce the number of resources needed?
- How can I make it more efficient?
- How can I automate or template it?
- How can I reduce costs?
- Can I outsource any of these steps in a cost-effective way?
Step 3: Determine the format. How will this system be captured? Package the process in an easy format so the team follows it.
Step 4: Identify a “System Champion.” Considering the hierarchy of expertise, determine the best person to oversee the system.
Step 5: Store the system in an easily accessible location for the team to access it. Create organized folders based on the departments of your practice. I have found that Google Drive, Dropbox, and OneDrive are good places to start, but they have limitations. In our practice, we use Whale, an online platform that easily allows us to store our systems. There are others such as Trainual, Sweet Process, SystemHub, etc., so do some research to find the best platform for your practice.
Extracting Existing Systems from Key Employees
It’s likely that you have more systems in place than you realize. After all, you have a functioning business. Things are getting done. Patients are being seen, you are selling glasses and contact lenses, and you are treating eye diseases. The problem is many of these systems are locked in the minds of your key employees. This information needs to be extracted from them and documented in a clear and efficient manner.
It’s important that we don’t make things too complicated here. Your team is busy and likely won’t be excited by the idea of carving out time to write down what they do all day. Also, you might encounter some resistance from a slightly different perspective: self-preservation. Some of your team may feel threatened by your request and may be concerned that you may have an underlying agenda, namely that once they share their systems, you may no longer need them. Encourage them that your goal is not to eliminate their position but to make life better, easier, and more efficient for them.
Ask them to jot down notes as they perform tasks, or have a coworker shoot a video of them performing the task, explaining as they go. This gives you the opportunity to go back and document the critical steps required. By documenting this process, you have created the system. Don’t worry if it’s not perfect. The idea is to get the information out of someone’s head and into written format. Our goal is to get it into a format that can be stored for others to access at some later date. You can spend time later tweaking the system to improve it.
Building a business that doesn’t need you may seem threatening at first. However, it should be empowering. It allows you to scale beyond your own limitations and individual capacity. Operating your business with systems empowers your team and gives you the flexibility to choose your level of involvement, thus freeing you to enjoy more of the rewards of practice ownership.
For additional reading, check out the following resources used to write the article:
- Scale: The Seven Principles To Grow Your Business and Get Your Life Back by Jeff Hoffman and David Finkel
- Scaling Up by Verne Harnish
- Build a Business, Not A Job by David Finkel and Stephanie Harkness
- Systemology: Create time, reduce errors and scale your profits with proven business systems by David Jenyns
- Traction: Get A Grip On Your Business by Gino Wickman