Episode 4: Expense Modeling
Part of the Planning phase of your optometry practice cold-start or purchase, The Financial Forecast & Feasibility Analysis answers all of your practice finance questions.
In this episode, we explore expense modeling leveraging industry benchmarks to forecast operating expenses across 7 primary expense categories.
Remember, it's all about your practice vision-- scope of care and patient experience!
Expense: volume, fees, & conversions
7-Point Expense Modeling Checklist:
✅ COGS-- materials costs across optical, contact lens, & OTC
✅ Payroll (non-OD)-- all non-doctor payroll
✅ Overhead-- utilities & general overhead
✅ Occupancy-- rent & "triple net"
✅ Equipment-- equipment & maintenance
✅ Marketing-- advertising, sponsorships, marketing, & digital presence
✅ Interest-- money doesn't grow on trees!
Complete your Expense Modeling Checklist at 4 time points:
1) Grand Opening
2) End of Year 1
3) End of Year 2
4) End of Year 3
Lastly, be sure to adjust Expense Ratios as practice scales!
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Planning for your future expenses is key to your Financial Forecast & Feasibility Analysis — lenders want to see these projections and how they will change over time (ultimately impacting your operating cash flows)!
Create your Expense Model…
Remember, managing expenses has a significant impact on NET Income (this is why NET Income benchmarks range 29.2%-38.2%, and sometimes higher)!
