If I ask you right now, do you know how much you are making from your practice?
If you are like me, sometimes I do. Sometimes I don’t. Until I made a conscious effort to know all the time.
To quote my finance teacher in post graduate school, “numbers tell you the story.” We were studying Financial statements (income statement, balance sheets, cash flow etc). Those stuff I would normally let my accountant take care of. Then I realized, “Hmmm, she’s right—these really tell the stories.”
Let’s talk about how these financial terms should make sense to us even if they seem like an entirely different world altogether. Now you know how others feel when we start talking about medicine, diseases and all that jargon! For a while I thought my accountant was getting back at me when I asked him to explain those financial terms!Maybe its his way of telling how difficult medical terms are!
As doctors, our expertise and our time are two of our most valuable assets. Knowing how much we make when we make use of these two helps us make good decisions about how we use them. I have to make a preliminary statement here. We know many of the things we do , we do for the love of it. That’s considered a given in this discussion.
Lets go to Income statement. Income statement is nothing but a story on what we engage in that yields an equivalent sum of money for us (income). It also tells us how much we spend to be able to do what we do and to live a life comfortable enough for us (expenses). Lets say, I chose to do nothing else but see patients all day, 6 days a week in my own private clinic. I also admit patients in the hospital. Lets say, I do procedures and get paid for it. If you want to be more detailed with your story, you can specify how much you earn from private patients, HMO patients etc. I do nothing else that yields some amount of money. Because I am just starting, I have nothing else in the form of investments or savings that is making money for me. Then the first part of my income statement would be:
***if by chance I accepted an administrative post in the hospital or is a retainer in a company and receive something for it, then I can include it in the revenue
***if after sometime, I already have investments like an apartment I am renting out , then this becomes part of my income
***other possible sources of income may include interest income or dividend income from investments you make. If you are a resource speaker for conventions or seminars, it can be included in your revenue too. If you write for a medical journal or a health publication and you earn from it, then it forms part of your revenue.
If you add all these, then you know how much you are making on a monthly or annual basis.
What story does it tell you? It can tell you where the most of your income is coming from. It tells you where you have the least effort but for which you receive comparatively better revenue. It tells you where you are spending more time but is receiving very little. It tells you how much you are receiving from something you need not spend much on but is generating some amount of money for you (investments).
If you write well and you churn out good articles in half an hour and you get paid a handsome amount for it, does that tell you something? Change of career? he he he… This only tells you that you may have other gifts or talents that can easily generate income for you. Its about time to tap it!
It tells you to find other ways you can generate revenue without you being actually present (its called passive income).
How about you write this part of your income statement now. See what it tells you.
Any other story you discovered?
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