The Mistake That Keeps PT Practice Owners Stuck at $1M to $3M

Hey, Paul, thanks so much for having me

It's great to have you on, and, we should do this more often.

Absolutely

All right, so let's start, let's talk a little bit about how owners get stuck. And, we're gonna come back to your story, but, I talk to owners every week. They're great clinicians, but they struggle in knowing, the key metrics of their business. Nobody really taught them in school. If you could add one business course to every therapy program, what would that be? What would it look like?

I'll take the first question, why they're stuck. As everyone is listening, when we were in school, we didn't get any business stuff whatsoever. Nowadays, maybe they'll throw a little bit of a one semester or something around business.

We're very smart around what we do. We've had a lot of training around our expertise, our craft. So of course, we're extremely good around our craft, and when you're good around something, and you get praised for it, patients love you. It's like a drug. It's that dopamine of, "You know what?

I'm really good at treating, and people love me for it, and I'm still in the business with everybody." It's hard to actually separate yourself from that. So that's one of the reasons why people stay stuck in the day-to-day of the business. To the second question, what would be a business course? I think anything would be good, but specifically, I think people had a...

I had a conversation today with about, 16 owners, and one of the people said... I said, what was your win today?" And she goes, I started leaning into KPIs and metrics and some of this stuff that I thought was, scary." And I went, "Was it scary?" Of course it wasn't scary.

So I think having something just around just looking at your business from a numbers and metrics standpoint, so it kind of deescalates the emotion. I think that alone would be a fantastic course.

But of course, there would be other courses that I would recommend as well.

Yeah, I think we could probably build a nice curriculum, and send physical therapists, before they graduate, two or three more classes to get them ready for private practice

I remember, I reached out to the school I went to, University of Maryland, and I offered to do even just a Q&A or like a 20-minute, "Hey, let me just share just a little bit about business in case someone might be interested in it." You know what they said, Paul? They said, "You know what?

They have plenty to do. They don't need to do that." I said, "I'll come on my own dime. I'll come after school and volunteer, whoever wants to show up." They said, "Nah, they're already busy enough." That's okay, I guess I get that. You're there to teach them how to pass a board to become a therapist. I get it.

So it seems like owners of some very healthy practices, and almost always it's because they've taken a step back from a full caseload. But a lot of owners feel like they're, again, like we just discussed, they're abandoning what they've been trained to do. so what are your thoughts on getting them past that kind of that guilt of stepping back from patient care?

It's interesting that you say that because I did a study, kind of an internal study. So I've worked with hundreds and hundreds of private practices as, as you have as well, and a lot of our, internal calls we record so we can help coach and support our coaches and things like that. So I said, I'm kinda interested.

What's really going on there, aside from the business structure, the systems and the process? What's really going on?" And I identified Four patterns that are like identity patterns of what keeps people stuck from moving to whatever that next level is. And you mentioned one of them.

One of them is the bleeding heart. It's the guilt that we have, and it's "Oh, I wanna be in that day-to-day with them. I feel guilty if I'm not there." The other is the loyal clinician, right? The mindset that says, "I'm a clinician. I'm not a business owner."

One is the perfectionist, right? Perfectionist is it's never, it's never the right timing, right? It's never good enough. And then the last one was the irreplaceable one. Nobody can do it as well as I can.

So these are four patterns that I've identified, and all of them are so true that these are more of identities.

When you think this is who you are, you tend to act in what your identity is. If you feel, "Hey, I'm a clinician, that's who I am," the decisions that you make within your business will fall into that framework. So that's what actually keeps you going, staying in that level.

What's in the best interest of my business is if I take a different view, I put really great people as clinicians, I start building out my management and leadership team. I am an owner of this business. Yes, I will always be a PT at heart, but my... I serve my company best when I'm an owner." All of a sudden, that will shift you to start thinking like a business owner.

What do smart, good business owners do? They know their numbers. I should know a little bit more about my numbers, so they start learning. I should know about marketing. I should know about hiring. And you start learning about the things because that's how you are identifying yourself with.

And there's so much darn research out there that actually support this, but I haven't seen really many people talk about this. So that is something that really keeps us kinda stuck wherever we are in our business. I've seen this happen with people that have $3 million businesses, but they're stuck because they just can't quite let go because no one does it as well as them

Yeah. And I remember back when we made that shift from clinicians, we had three owners, clinicians to business owners, all with roles and responsibilities. But we needed somebody to show us how to do that, that was the key. It was, "Okay, here's what you're gonna do. You're gonna do business development, you're gonna do marketing, you're gonna do workers' comp." And until we had that role responsibility on what we were going to do and a plan on what we were going to achieve, really hard to step away and, patients gave you funny looks when you're in your business office and, staff is wondering what's happening here. So it's definitely a push, to get business owners to do it, and I'm sure it was with yourself, and it certainly was with myself.

Oh, I was trapped in my own business, trapped getting out of my own way for years. And I had the loyal clinician mindset, the bleeding heart mindset, and I certainly had the perfectionist, and no one can do it as quite as well as me. What I found was the real kicker for me after going through years and years of this, I just finally come to the conclusion of what is it do I want?

What do I want from all of this? And that's something that I ask people, and it's not an easy question necessarily to answer because we all live in our day-to-day. We all live just putting out the fires, trying to get to the end of the day, trying to get to the end of the week, trying to hit that next level of income or whatever.

But we don't step back and say what do we want from this?" Whether it's two years or five years, and I think it's important to get ourselves out of this day-to-day mentally and look at what we want and then say, "So who do I have to become? What role do I have to play in order to get there?"

And when something that you want is important enough for me, Paul, I didn't wanna show up on Mondays. I freaking hated Mondays. I don't know what the heck happened over the weekend. It's like the witching hour. The people come in Mondays, patients are crazy, staff's crazy. I'm getting, you know, people leaving the office, all kinds of stuff, and I go, "Oh, if I could just start my week on Tuesdays, this would be great."

And when I finally got a coach, someone to kinda help me think through this it became evident, like I was too so far in the business, I didn't have a perspective. And I realized that, you know what? I have a great team. What if I helped train them and guide them to treat? What if I helped them actually be successful doing it?

And all of a sudden, I was like, you know what? Yes, it's uncomfortable. Yes, I'm uncomfortable doing it. It's challenging my identity. But I wanted what I wanted, not showing up on Mondays, more than what it would take to be uncomfortable to get it.

People like you and myself and a lot of other people that you see their success, it's because they wanted what they wanted more than what it would take to get there, and I think that's a big thing

I think that and I've always said this, I, I've talked to, folks, in college, I go back to Gettysburg and give talks to their business groups, et cetera, and the two things, one is a mentor, but sometimes those mentors need to be 5 to 10 years ahead of you. And we're embarking now on a private practice section conference. We were talking about it before we jumped on this podcast. How important do you think is it for physical therapy business owners who are young and maybe still treating patients and can't kinda get themselves unstuck to talk to those business owners who are 5, 10, 15, 20 years down the road and, seeing actually how they did it?

Yeah. My opinion is I think everyone should have a mentor. We can't see what we can't see, and, having someone that has a different perspective, especially a perspective in something that you're interested in "Hey, one day I may wanna open up a business," or, starting my own business, having someone that's been down the road that you are can really only help you, and that's what mentors do.

And, I don't believe success is ever done just by yourself. I think it's always a group effort. I've never seen a successful person that didn't have help and support. This idea of this rugged individualist, do it on your own, I think that's crazy, and I think that's just our ego, talking.

So yes, having someone, whether they're 5 years or 10 years, heck, just start with anyone that is further along to where you wanna go, and have those conversations. And what's interesting is that there are so many people out there that would love to share their wisdom with people. Yes, my business and your business, yes, we get paid for that wisdom.

But look, I guide and help people even not getting paid if they have questions around something, especially younger people that are just, "Hey, what is opening up a business like? Like, how would that work?" I love that. I wish I knew that more when I was younger, how much people that are older and more wiser than I am, how much they love, quote, "giving back" to do that.

But a lot of times it's our head trash that says, "Oh, they don't wanna waste their time helping me," or, "I don't want them to think I'm stupid," and all this negative stuff?

Why can't we look at ourselves and "Oh, you know what? They wanna help me. Me asking questions is a power. It's a strength. It's not a negative. Me being open is a good thing." I think if we had more people like that, there's plenty of people that wanna help, and we as a profession would be in a much better place.

And I think as I mentioned before, at that private practice section, I'm always it's so great to see owners who have experience talking to owners that don't have so much experience, being very forthright with the information that they're giving and not being afraid to give too much. And I think, it's just, it's a great opportunity to learn from a lot of really experienced business owners.

Absolutely

So let's talk a little bit about building a team. And again, this is what I see in business owners who are, at that 1 to 3 million stall zone. It seems as though there's not really a true management or leadership team. The owner is still making just about every decision. why is that ceiling so common, do you see? And what's the first leadership role that you think an owner should begin to build, as they're growing a practice?

Yeah. So that's a really good question. I see there, there's a couple natural ceilings. The first natural ceiling after you start your practice and you start, building and growing it is that million-dollar mark. Anywhere from nine hundred thousand to one point two or even one point three million is a natural ceiling 'cause that ceiling goes from an owner really not only treating, but also doing a lot of the other roles.

You have definitely a few other providers with you, other therapists with you, but you really can't make the money you wanna make, depending on your model, without you treating. So you're working an exorbitant number of hours. It's just kind of par for the course, so to speak. So when you get over a million, what you were doing to get there is not what it's gonna take to get to that next level.

So that hits every single one of us. You're included in that, I'm included in that. Anyone with a business at that level, especially a service-oriented business, you can't get around it. The next level after that is that three million dollar level So here's what happens. You can't do it all, and if you're willing to let go, this is where letting go and delegation become a big thing, and this is where looking at those, your own identity and saying, "Hey, are you willing to let go and allow other people to help?"

So who do you bring in? The first thing is, the easiest thing to bring in is start focusing on some of the administrative stuff. None of us got into this darn business for administrative stuff. One of the first things I did, I was doing bookkeeping.

Bookkeeping is not my thing. If I was off by only a thousand or two a month, I was happy. I had no idea how to reconcile QuickBooks. I didn't know anything. I just quickly did it and did the best I can. And what I realized is I didn't wanna hire a bookkeeper because I didn't wanna pay for it, and I was trying to save money.

That mentality was a scarcity broke mentality that kept me broke. So when I said, I'm investing in someone else that knows a heck of a lot more about this thing, let's test it out for three months. Let's see how it goes." Of course, this person came in, revamped not just our whole bookkeeping, but all of our systems and everything, freed up my time, not just physical time, it freed up my mental time because now I trusted my numbers and I was able to focus on the next thing.

So looking at these administrative types of things, I think are the number one, and we all have them. So the best thing is we have technology that can help now, some of these AI things. We also have, like VAs. We have virtual assistants that can handle some of these things.

I would include some things even around social media and things like that. So looking at it from an administrative standpoint, those things, if you wanna stay in treating, then I would say that's okay for a little bit. Eventually, as you start to grow and you start putting in some of these people to handle some of these positions, we now need people that own the position.

They own the outcome For example, you start, let's say, putting in a clinical director. Personally, I don't believe a clinical director can ever do their job if the owner is still treating 'cause someone walks in, and they say, "Who's in charge?" They ain't pointing to the clinical director.

So I believe there at least has to be a period where the director can actually be the director, own the outcome, own the role. Your job is to help support them, so they can be successful doing it. As you go to that one to three million, the way you're gonna get past that three million is start putting in, first, your management team, second, your leadership.

The difference is management, you're still really in charge and helping them. Leadership is owning stuff. Leadership is they're thinking and strategizing with you. Management are still waiting for direction and some specifics with you. There's a fine line between the two terms, but the bottom line is you have to be open to allowing other people in the simple areas.

I'm working with a company right now. They're at ten million. What am I doing with them? They're hitting a ceiling. And by the way, ten million is another ceiling.

Yeah

They're hitting a ceiling because they don't have a clear leadership team.

Director of clinical, operations, director of administrative operations, director of finance, director of business development, and there could be some others in there, but those are like the core ones. If you're able to establish that when you're smaller, it makes growth a heck of a lot easier. You're still gonna have your ceilings, but it makes it where mentality, you're used to bringing people in, coaching them, guiding them, mentoring and putting in KPIs, job descriptions, meeting rhythms, all these things that make it easier to go through the three-million-dollar, ceiling.

Sometimes there's a five-million-dollar ceiling, ten-million-dollar ceiling. Wherever you are right now, if you can just start doing those things, start with the simplest thing. Just delegate one thing administratively that you don't like to do. Just delegate it right now. And if you have a team, most likely someone can take it over, and it won't cost you anything.

And Jamey, I think that a lot of owners, when that is explained how that all can happen, know, the first question, as an owner that most would have I would think is what does that do to my cash flow? What does that mean? How much revenue do I have to add that director of operations, to add that director of marketing? How do they see it, Jamey? How do they see it before, if you see it, you can believe it, right? How do they see it and then execute on it?

Yeah. If you see it, you can believe it. I believe in the other part. When you believe it, all of a sudden you start to see it. So the real thing is I believe you should be profitable every step of the way. Every step of the way, you should be profitable. If you're not profitable, at three hundred thousand dollars, which is more or less just you as the clinician, you're not gonna magically be profitable at a million.

So you need to be profitable. When you hire someone, yes, there's always gonna be a little tiny dip, but let's try to reduce that dip. You hire them, how about we work to help them become successful and profitable within ninety days? So when you start bringing those people in, you're still profitable.

When you start looking at your clinical director, hopefully your clinical director is someone that's internal that you're grooming. It doesn't mean they go full-time clinical director and not treat.

Right

Twenty percent of their schedule, which is, depending on your business model, is eight hours of visits. This is where you really need to get good at looking at your numbers, looking at the KPIs, looking at your P&L statements. Stop guessing. Stop getting into that, monkey brain that we all have and getting that emotional triggers around the money.

Just look at the emotionless numbers and actually see what it would take to get where you wanna go. Look, business is about risk. Business is about investing in yourself and trusting yourself to then, create the plan and execute the plan, and if it doesn't work the way you think, which many times it doesn't, you learn from it.

So it's not about being right, it's about adapting. You start again, when you're smaller, million, whatever, two million, you build this risk, this risk muscle. And what you start to learn as the more you're able to invest, yes, intelligently using numbers, the more you're able to do that, the more you put it on yourself to help create an environment, help create clarity, help create an opportunity for people to grow, you start creating leverage. This idea of, "Yeah, but how do I know for sure?" Here's the deal. You did all this work and effort. Here's the example I use, Paul.

You did all this work and effort to get the opportunity to apply to, in this case, PT school. There was no guarantee you were gonna get in. You got an opportunity to get in, to do what? To pay six figures, multiple six figures, to do what? No guarantee you're gonna pass, no guarantee you're gonna pass the boards, no guarantee you're gonna get a job.

So you did all of this without thinking twice. Why? Because you believed it. You believed in yourself. Somehow, that belief shifts in business, and many of us all of a sudden get this scarcity, get this fear, perhaps because we haven't really worked that business muscle enough. But if we start working that and start learning about this, this business, learn about what it is, we're certainly smart enough.

We know our craft very well.

So that's where I think that this idea of, oh, if I invest, or we don't even use the words, if I pay for this and it costs me all this money, how am I gonna make it back with, with, you know, make more income if I do that? Well, the idea is, why don't you check your numbers, check what that's gonna be, create a plan to do it, and then just get to work, and then, you know, debrief it.

You know, reflect on it. The successful people do that. Unfortunately, the non-successful people don't. Learn from the successful people

Seems like there's a growth and then it's okay, now regroup, make sure you're profitable, growth, and it's never this, right? There's always some regrouping, reconfiguring, looking at new ways to do things,

It's the hockey stick, right? It's the hockey stick that goes up. There's a book called The Second Curve. I believe Charles Handy originally came up with that concept in 1995, The Second Curve, which means no matter what business you're in, the business will go up, then it'll start to plateau, and if you don't put in infrastructure with people and systems and an owner that knows how to do that, yes, there might be a little bit of a dip, and then it goes up again.

Little bit of a dip, and it goes up. It's every business. It is tried and true, but we get so emotional, Paul, around that, that sometimes we're like, "Oh my God, it's not working anymore." No, this is intentional. What you've built got you to this level but won't get you to the next. So just focus on the things that will help you get there

Yeah, you're looking to create a business that can essentially run without the owner. But as you and I both know, in most transactions that are out there, if somebody is going to sell their business someday they're going to be a big part of a partnership going forward. But it's those businesses that seem to be able to, if an owner would take a three-month vacation, would come back and the business would still be running as it was, three months. How did you get yourself to the spot for you when you sold your business that your business would literally run even if you were not there?

Yeah, my goal I told you was not to work Mondays, and what happens is I didn't work Mondays. And then I realized wait a minute, if I just put in good people with systems and elevate myself to be a better owner, which takes work, how to be a communicator, how to think and all that stuff I'm not needed as much in the day-to-day.

We can answer the phones. We can bill insurances. We can treat people really well. We can follow up. So by the time I sold my business, I hate to say it, but I was maybe, quote, working five hours a month. Going in, having meetings, but I was still looking for opportunities.

And what turns out is my business was valued more, not just because my EBITDA, is because your business is valued less the more your business is dependent on the owner 'cause there's a higher risk, right? They're gonna lock you in for a longer period of time. They're gonna put, quote, the second bite of the apple, to targets 'cause they wanna make sure that if you sell a part of it, can it still operate?

I've had a fortunate experience where I never worked another day once I sold it, and I only had ten percent held back in escrow. That's not the way the world is right now. So whether you wanna sell your business at, one and a half million, five million, ten million or more, the idea should be what part of the business can operate with my guidance, my tutelage, but not with my direct physical efforts?

If you just shift your brain to think like that, then you will start to look at what's on your schedule and start to move what could someone else do perhaps better than you can. So that's the mindset that you start building in.

I sold it for one point four million. I know the risk I had. Yes, I wasn't there for more than five hours a week. I know if my clinical director left, there would be trouble. So there was definitely a risk associated with it for sure. Now, the bigger the business, the decreased risk because you have a leadership team of, let's say, three people.

You have a management team with multiple directors and other people that can help. Then you have lots of providers and then other support people, not to mention solid systems in place and technology. The business itself can operate with your guidance, but not you going there and moving the flywheel.

Businesses like that are typically more, attractive to buyers. Ultimately, it has to come down to EBITDA and stuff like that. The idea is if you can get lots of providers, if you can get people to do the operations of your business and you're still needed as the leader, that business is not only gonna be more valuable when you sell, it actually gives you a great life now to enjoy while you're doing this.

Jamey, I think what you were able to prove out that when you got your business to a point where you were putting in five, and I imagine those were five, hardworking hours, right? You were five hardworking hours.

But when you got it to that point, you had choices, you had options, you could have, for a period of time, as you said, continued to do that because that's not a bad lifestyle. That's almost considered retirement in, in some definitions of retirement. I think the choice that it appears that though, that you made was to sell the business because you still had all the risk. And when you're out of the business, as soon as that clinical director may either quit or a, a big change, you would've had to jump back in there. So you made the choice, and I absolutely believe, and I've done a couple transactions in this industry but a business, especially of the size that you had, was far more valuable because of the way you had positioned it to be able to run essentially without you.

Absolutely, for sure.

One of the things we do when we take on clients and we like clients that, have built a business at least up to a million dollars or more that have aspirations of growing and realize that they're the bottleneck, realize that they're stuck, and they want guidance. They want someone to help them, find that path and how to get there to eventually at the point then come to you with this business done the right way, which makes it easier for you.

You put the bow on it and find the right type of buyers and the right terms for them. That's the whole point of this is creating something that makes the impact that you want, that creates the income that you want, that creates the legacy and the lifestyle that you want, that also supports your people.

I just think every single person should be doing this and thinking this way. Unfortunately, that's not how we're trained. That's not a lot of people's view on things. They believe maybe grinding away and all that. It's funny you mentioned retirement. Paul, I can't tell you how many people thought I was retired.

And I go, "I'm not retired. I'm working. I just look at work differently than you."

The best you can do grinding away, the best you can do is whatever that income is sacrificed by the number of hours. And I realized it was affecting my personal health, it was affecting my relationships with my wife, it was affecting my relationship with my kids, which I didn't see.

And I went, "I don't care how much I make. I don't want that life." That's what not working on Monday meant. What I didn't realize, Paul, which of course you already did, but I was too stubborn to ask someone like you twenty years ago, I didn't realize that I was actually gonna make more money as I extracted myself from the day-to-day.

I didn't realize that. I was willing to make less money. And then lo and behold, I'm making more money, I have more time, more energy, and I have a better team, and my business was worth more when I sold it. I go, "Oh my God, everyone needs to win in this model." So this whole win-lose mindset started to change.

So it is wild, and I've helped, dozens of people since then do this, and it's just amazing. And I just try to get the word out. I know you do too. This is how you want to build your business. The problem is you have to shift what you think you know about business and shift what a lot of your friends and people are doing, 'cause it's not creating this.

But it's possible. It's been done, and every single person can do it as long as you're willing to adapt and really look at your business modeling, your numbers, and get honest with yourself.

Yeah, and Jamey, it's just so cool that you've taken something that you did, and it wasn't by accident. Something that you did that made your life better, now you wanna go out and help others, and now you have been out helping others for many years now, basically do that exact same thing that you were able to do.

If there's one thing that you would tell an owner out there who feels stuck that they could start doing this week, what would be that one thing?

Look for the one thing on your calendar right now that is most likely administrative in nature, and allow someone else to do it.

Give them direction, be clear on what the outcome is, give them whatever support you can of what you did, and allow them to do it and go from there

Yeah. That's great advice. Jamey, thank you. And so as a close, where can listeners find you and your team? And I know you do something that is called the Practice Freedom Assessment. Where do they find that, Jamey?

Yeah, so the Practice Freedom Assessment is a, great tool that we offer. You answer some questions about your business, and then we provide, just a simple report with based on your answers about kinda where your business is right now, where are the opportunities in your business, where are the potential leaks in your business.

So it's a really great snapshot to kinda give you of where you are right now and some guidance of what you can do. Of course if it's something you wanna talk to us about, we're happy to do that to see if this is a good relationship to help you. Other than that, I have a podcast called Freedom by Design.

You can certainly check that out on YouTube, I'm on LinkedIn @jameyschrier and Facebook and Instagram. I always love connecting with people.

But I would start with the Practice Freedom Assessment for sure.

Jamey, thank you. Appreciate it

Thanks, Paul