How do you know you’re earning enough to pay your bills? You may remember that this was a question I addressed some weeks ago, when I showed you how to calculate the Break Even Point for your practice. (You can read the article here.)
Calculating the Break Even Point gives you an idea of the number of clients you need to see in order to cover your costs. Or if you work a consistent number of hours, it tells you how much you need to charge for each hour you work.
So, having calculated your Break Even Point, and you know what you need to do, then what?
Well, the break even point is what’s known as a Key Performance Indicator or KPI. In other words, it’s used to help you keep track of how you’re doing in your practice, financially speaking, without having to go to the trouble of preparing regular financial accounts. You find one figure that tells you whether you’re roughly on track or not and use that as a bench mark. KPIs vary from business to business, and from practice to practice. They may be stated as we have already seen, in terms of clients, time or money. Read more