Our guest is Christopher Music who's a financial prosperity coach. Financially speaking, this may be the most important podcast that I've done to date. Christopher joins me having twenty plus years of experience in the financial planning profession and is a best-selling author and financial expert. He's been seen on NBC, CBS, ABC, and Fox affiliates around the country on The Brian Tracy Show. He's also been noted in Forbes Magazine, Newsweek, and various healthcare industry publications. Christopher has over 100 physical therapy owner clients in his practice and has focused his efforts on the private practice owner, whether that's in physical therapy, veterinary medicine or dentistry.
A lot of the tenants that we speak about are true regardless of what industry that you're in. You're going to find some immediate, near, and long-term financial success by following it through with those tenants. I can’t underscore the importance of it. He’s got some great information both in the podcast and also on his website which is www.PChristopherMusic.com. He has free information, free downloads and has plenty to share but hopefully what you take from this is at least one or two things that you can immediately implement into your practice ownership so that you can make it a financial asset in your life and create the stability and financial freedom that you’re looking for.
Thanks for joining me, Christopher. I appreciate you joining the podcast. As someone who's not a physical therapist, I love bringing you on because you work with over a hundred physical therapists across the country. Do you mind sharing with the audience a little bit about yourself professionally and your work with physical therapists in general?
Thanks for having me on the show. I've been a financial advisor now for 26 years. I started in Columbus, Ohio. I built a practice and I sold it for twice the average market value in 2002 and moved to Florida. I became a business consultant working in a lot of different professional practices and different small businesses. When the great recession came along, I realized that people were getting killed financially because they had no real technology on how to attain and maintain wealth. It's a very multifaceted subject. I went to work and created a science of financial planning called the Econologics. While I was building that, a lot of my friends who are also business consultants had different professions that they consulted, like chiropractors, dentists and veterinarians and one of them consulted physical therapists. I went to them and said, “Why don't you refer me to a couple of clients?” They did and they were in bad shape. I said, “No, I want the good ones too.” “Why don’t you create a seminar where we can educate these PTs on how to build and protect their wealth and we'll get the financial plan as part of that package?” We developed relationships and we have 120 PTs that we serve all over the country from Hawaii to Maine. We help them build and protect their wealth in a very scientific and very predictable way.
Having such a varied amount of experience with so many physical therapy owners across the nation, what are some of the common themes or common issues that you see amongst the physical therapy owners that come to you financially speaking? Is there a common issue that they're dealing with in general?
There were a couple. The first one is the mindset. You have a PT who is interested in physical therapy, not business ownership for being a professional investor. The problem is when you get involved in private practice, you now have two other functions that you need to be as good as or better than you are being a PT. The first one is being an executive. You need to know how to create a group of people, how to manage them, how to hire, how to train people, how to manage your finances, sales and marketing, public relations and so on. I have an MBA and that was worthless. You have to learn from someone who had the blueprint. You find the top 10% of successful PTs in your industry and find out what they're doing and do what they do.
Follow the same blueprint that they created because they’ve won that through blood, sweat, tears, money and sacrifice. That's where you're going to learn that. You're not going to learn that from any school or anything like that. That’s the first thing. The second thing is how to be a professional investor. When you have a private practice, you own an asset, a business and you have to treat it like a business. Just like Warren Buffet were to invest in your business, you need to be investing in your business. You need to know how to get the rates of return, how to run profitably, and how to build that thing to sell. One of the biggest errors that PT owners have is they don't build the business given the idea that someone else is going to own that thing someday. They just want a place to practice so they can be the captain of their own ship and practice PT the right way, which is their way and I dig that.
They've got great motives for getting it started. They're excited about doing things their own way. No one's going to tell me what to do. I'm going to be my own person. I'm going to see my own patients. I'm going to build this great thing and make a huge difference in my community. They're looking for success and they're looking for significance but many times, they don't go into it recognizing that they have now essentially taken off the physical therapy hat and put on the business owner hat and without even knowing it.
They don’t know the games they are playing. If you want to be a staff PT at a hospital, that's one thing. If you know how to manage your business, understand that you'll start getting results when you realize that you're not building that business for yourself. Those are two different mindsets that have to be involved in this game called private practice.
I love what you said about building it to sell. I don't think a lot of people have that in their mind that it is going to be sold. You're not going to own it forever. It's going to change hands at some time. The way to maximize that is to have it set up financially, structurally, legally, so that it is a smooth transition. The more you can make it a sound structure like that, the more profitable it's going to be, even if you don't sell.
If you're building it to be the most profitable owner-independent business, owner-independent means it runs without you, which is what you want, then why would you ever sell it? That’s the question people get to us, “Why would I ever sell it?” Someone will come with a big old check one day and say, “I'll take this thing off your hands” and you will have to decide sooner or later. If you understand retirement planning at all and the changes of viewpoint as you get older in life, you'll come to a point where you're like, “I'm done.” You’re going to be done. That's going to happen in one way or another and either you're going to have a seven-figure asset to show for it or not.
You want to set it up so that it is running well and that takes a lot of effort that physical therapists aren't trained to do. I'm sure you've seen that. We’re trained to treat patients, we're not trained to run businesses.
One of the biggest crimes is to graduate students from any level of schooling with not one lick of financial or real economic training, business management training and sales skills. Those are universal fundamental things we need to know just to survive in a money economy.
That's one of the reasons I've set up this podcast is to share with other physical therapy owners that they didn't get that education and we recognize that. In order to overcome that, we need to invest in consultants, coaches and professionals like you who can give us that education essentially.
My personal blueprint that I created cost me at least $1 million out of the pocket of money that I lost to find it. Not to mention the thousands and thousands of hours of trial and tribulation to come up with it. Any consultant worth their salt is going to have done that. You have a choice. This is simple economics. You can either go through the same learning curve and pay the same fee of time and money to learn it yourself or you can buy the blueprint from someone else. Who cares if it's six figures? If you can make seven figures of the six-figure fee, what do you care? That’s far better off than trying to go through the pain of learning it yourself.Your education is an investment. Click To Tweet
You’ve got to recognize that your education is an investment. I love your idea that mindset is huge and where we need to start this. What are some of the other steps you take with physical therapists to get down that road? Any other common issues that you see that physical therapy owners aren't addressing?
Probably the biggest issue is staffing. Financial planning, which is my area, is a function of post-income earning. Your income planning comes first. How are you going to make money? Financial planning is how you’re going to spend money and how you’re going to spend it on future income and value and how you’re going to protect yourself. That's the area of financial planning. Income planning is a different function, although under the broad umbrella of financial planning. Income planning is marketing. How are you going to get new patients? The number one thing PTs always want to know is how do I get new patients? That could be the answer to everything. No, it's going to be the answer to this week's income. The big question then is how do you hire people to handle these functions to be ethical, to be productive, to work as a team, to be able to be trained and coached? Your job as a business owner is how you’re going to either do it yourself or put someone in place that has the capacity and the capability of doing all of that. I am not good at that. I'm not good at hiring and training people, but I have people who are.
You’ve got to find the people that will do it. That says something. It’s very simple but you've got to recognize how well you do as a business owner. You're a physical therapist but as a business owner, what are your strengths and your weaknesses? If your strength is marketing and it's not in training, then you need to find someone who's going to train or vice versa. If you're great at training and building an executive team but you hate getting out and knocking doors and making the calls and doing social media, then you need to hire somebody to do that.
This function has to be done. There's no way you cannot do them, but there is a big decision whether you want to do it or you want to get someone else to do it. Here's the truth and this is where people fail a lot, especially in the financial area. You cannot delegate the responsibility for that as an owner. You have to be able to know what that person is doing enough to oversee them, to make sure they're doing their job. You can't just turn it over to someone and then let me know how it goes, which some people do. There's no reason ever for a professional practice to be financially in trouble. The only reason it does happen is that practice owners misspend their money. They spend it on things that don't create future value like marketing, like the staff and like business systems. They spend it on cars, big houses, and this lifestyle rather than building a business and/or they turned the accounting over to someone else and they don't understand how to read a balance sheet and money disappears, doesn't get collected, and then you end up having all kinds of trouble there too.
How do you recommend the owners engage with their CPAs? How often do you recommend that they meet with them? How engage should they be?
The first criteria is what is your CPA doing for you? CPAs do a lot of different things. Some of them do bookkeeping and you need to get with your bookkeeper every month. A bookkeeper is the one who keeps the books, your profit and loss statement and all your transactions. As an owner, you have to see that profit and loss statement every single month. You have to know what the numbers mean. If you don't know, you go take a course on how to read a balance sheet. Probably you can go watch a YouTube video and learn.
Even looking at it and recognize where your trends are, when the expenses may be a little bit higher than normal compared to the previous month or previous year and a lot of those things.
That’s strategy. That's management. That's financial management. An accountant is not going to do financial management, nor will your bookkeeper. A bookkeeper is going to keep your books and you want to make sure that they're accurate and that you can read them and plan with them. Your accountant is going to get the data from the bookkeeper. They may do the same function or whatever and they're going to keep your books and they're going to make sure that everything is accounted for. It accounts for things, where's all the money. Taxes are different things. Taxes are simply the reporting of what the books say to assess an income tax. Your accountant simply just prepares the return. 97% of accountants just prepare the return. Only 3% will do some planning to reduce taxes. I hear it all the time, “My accountant doesn't help me save taxes.” Did you ask him if that's his job? 97% of surveys say, “No, it's not my job,” so we wonder. As far as managing the books and all that stuff, every month at the worst case, you’ve got to keep your finger on the pulse of your finances or you’re going to be broke. This is the truth.
You have to know the language as well. You've got to know what your cashflow is. You've got to know what your net profit, gross and your margins are and all those kinds of things that we weren't taught.
That is a very important point. If I were to be thrown in a physical therapy office and you guys start throwing around the Latin terms and the anatomy terms and methods and all these other things, I'm not going to have any idea what you're talking about. I’m going to probably get pretty mad at you eventually because I'm being excluded from the conversation because I don't understand. That's what financial people do to nonfinancial people every day, “I don’t understand finances.” You understand finance just fine. You just don't understand the words that define certain concepts. What I'm going to suggest you do more than anything is if you come across an accounting term or a financial term that you don't understand, get a dictionary, Google it immediately and get a definition for that term. Money is an intangible thing. It's strictly concepts. If you don't understand the concepts, you're not going to get control over your money. It's that simple.
Are there some things that you're doing with your physical therapy owners that you would recommend everybody do in general? We talked about mindset and considering your practice as a business, as a retirement asset, is there a general thing that you highly or strongly recommend that physical therapists do in their clinics right off the bat?
You have to understand that your practice works for you. You don't work for it. The practice is owned by the household, the owner. That practice needs to be made to produce and needs to be made to throw off income to the owner. The only way you do that is by a little bit of force. It's not going to happen by a wish or be nice or I'm going to manage it all then hopefully something comes out the bottom and I get to spend that. The way it works is that you need to be pulling money out of your business to pay you as the owner right up front. Practice owners being altruistic don't understand what value they bring to the table. The practice would not exist without your license.
There would be no business without your expertise, your intellectual property, your creditworthiness, your capital, just to name a couple things. Not to mention operating as a director and as a consultant to your own business and so on. What's that worth economically? Let's say it's worth 10% of practice gross. In the licensing world, if I were to license like a franchise from somebody or to license a system, I'm going to pay about 25% of my profit to pay the licensing fee. Let me translate to a percentage of gross income, but let's say it's 10% of gross income. As an owner, you have the first right of that first 10% of the revenue that comes in a year to be paid to you.
Every dollar that comes in, the first $0.10 is yours. Then you can pay everybody else: the tax man, the rent, your employees, the marketing and everything else. Until you do this, you will never have any money because you're paying everybody else first rather than you as the owner. That's what we call an inversion. The exact opposite of the way something should be. Inversions are terrible because they get the exact opposite result than what you're going for. An example of an inversion is, “Is the government run by the people or does the government run the people?” That’s an inversion because the government is running the people. It's the same thing with your practice, it can get that results. The first thing I'll tell a PT clinic to do is take 10% of their practice gross income off the top and put it into a bank account that they will never touch ever again.Your practice works for you. You don’t work for the practice. Click To Tweet
As they freak out and have loss of bodily functions and cold sweats and all these things, then there’s, “But why?” The only way you're ever going to have any money out of your practice is if you pay yourself as the owner first. You're the most valuable person there. There is no altruistic, ethical thing in place in the world to pay everybody else than yourself. There's no benefit in sacrifice. Let's say $1 million practice, that's $100,000. “You want me to take $8,300 a month and pay myself before I pay anybody else? You are out of your mind.” Everyone always tells me, “Christopher, you don't understand.” I do understand. You're already spending 110% of what you make. I know you don't have it and the reason why you don't have it is that you haven't put it there. Here's the beautiful thing about private practice. Anybody who is going to say, “Yes, I'm successful in private practice,” is going to do one thing. That is to cover their bills.
If you're making $50,000 a month and you're spending $49,000 a month, “I am a rockstar practice owner. I am killing it. I am covering my bills.” Everybody's doing high fives and life is good and so on and so forth. Then if you're not covering your bills, “Probably I’ll cut back. We got to work harder or we got to get everything going. We only made $48,000 this month and I spent $49,000.” That is like the bare minimum of covering your bills, but that's another discussion. If we say, “I can't possibly take $8,000 a month or whatever it is, 10% of my practice gross and clear it away.” Yes, you can. All you need to do is make that an expense of your business.
If you put that extra 10% in there as an expense of your business, then what's going to happen to the income of that business? It's got to go up to cover the bills. The amount of income you make right now in your practice is what you have determined is going to be enough to cover your bills. We’re not even assessing what the bills are yet. There's probably a lot of waste in there, but you’ve got to make enough money to cover those bills, “I had another 10%. Who cares?” Within three months, six months of the way outside, you can be making enough money to cover those bills. That's the miracle of that 10% because the gross income of your practice will go up. The beautiful part about it is it's not going out in taxes. It's not going out in waste. It’s going to pay for the practice owners’ retirement, which would never occur any other way except for the $300 a month put into the IRA because your mutual fund salesman sees this to be a good idea.
I don't think we see that there is money to be had within our company and if we put ourselves first, other things will work out.
That's the most beautiful way of saying that.
It goes back to a decision filter that I learned a number of years ago. You put the business first, the owner comes second and then the employee comes third. If you follow that decision filter that you run the business for the benefit of the owner and then pay your employees and cover your bills, if every decision is made that way, then things tend to run smoothly.
The owner, sooner or later, is going to experience a time where patient visits are going to dry up. Either because of a lack of marketing, a market crash, your main supplier of your patients might disappear like a military base or something. If you have enough money accumulated in assets that are in the household out of the business, then you can turn on that and make a loan to the business to make it survive if you lose a lot of patient visits for a period of time. You have enough money to bail it out as opposed to groveling to a bank, which is not going to lend you money when you're in trouble anyway. Have it close the doors and things like that.
I wish I had taken your advice fifteen years ago. That way I'd be much further ahead. I hope people are trying to figure out ways that it can work. Not just saying, “That's good advice and maybe I can implement it and bring it up with my wife,” or something like that but take it to heart and say, “Let me look at my P&Ls. How can I do this? Let's do it.” Set up that bank account, talk to your bookkeeper and your CPA, and say, “This is what I'm doing going forward.” Control what you can and make the effort to make it work.
We work with mid-career professionals. Our youngest one is probably 32 and our oldest is probably 65. The first thing people say is, “I can't afford a financial planner at this time.” That's not true because we have a 36-year-old right now who came to us about five years ago. He's got about five years and he can retire. He just decided to do it. He couldn't afford it because no one ever can, but he did it. He followed our advice and he's building a multimillion-dollar practice that he's building to sell for more millions of dollars. He's doing it for that purpose all on the way saving his 10%.
The truth of the matters is this. You haven’t got enough money to do a financial plan because you're blowing it all in taxes right now. There are three tax strategies that we can get anybody to implement that would pay for a solid financial plan that you are already blowing every year. It all comes down to where you spend your money and if you get control over the wastes. Taxes are waste, interest is a waste, over-paying your investment fees is a waste, which most people do. Reclaim all that and put it towards your financial future and your efficiency, then nothing can stop you. It creates a synergistic effect, an exponential effect as you move along.
Is there anything else that you might want to share with the audience or maybe even how they can get in touch with you?
You can go to my website, Econologics.com. We wrote a book for physical therapists called The Financial Success Guide for Private Practice Physical Therapist. You can get it on Amazon. We might have a free download of it. There's some information in there about how to get more profit out of your practice and how to introduce that 10% rule and a few other things that are going to help you as a PT practice owner to start to gain efficiency. It's efficiency. I know it's a boring word, but get that money started going towards things that create a lot more value than being wasted.
It's more than just efficiency. Two of my things about starting the podcast and what I was looking to do with my physical therapy clinic was to create stability and freedom. When you create that financial efficiency and take control of your clinic, then you start to see both of those things. The clinic doesn't run you, you run the clinic and then you start obtaining some stability and freedom in your life.
A private practice millionaire model is the practitioner, the executive and the owner. I see PTs go to physical therapy conferences. They tend to go to all the new technical stuff because it's so exciting and all the business consultants and the financial people are looking at each other. The big truth is that you are not going to make more money by being a better practitioner. That's the big lie because being an awesome practitioner is not what is economically viable. What’s economically viable is marketing. It’s managing people to go from a staff of three to a staff of 30 so you can deliver whatever quality of technical delivery you have to more and more people for more and more money. The public doesn't know or care if you're a 10% better PT than the guy down the street.
If you want to do it for purely academic purposes and a feeling of self-accomplishment, that's wonderful and that's great. You've already made your investment in being a PT. You went to school, you’ve got your license and your degree and you're doing a continuing ed. From now on, your investment needs to be an understanding of economic laws. If you understand basic economic laws and you use them, you'll be wealthy. If you violate them, you’re going to get killed. You can look at your financial situation right now and you can see a snapshot of how much economic law you actually know. If you're wealthy, you know more than if you're broke.
One of the things that we did was we created a questionnaire online that I'm going to invite everybody to take. It's called the Financial Prosperity Index. Go to FinancialProsperityIndex.com and take the test. It's a questionnaire that gives us a snapshot of basically how many economic and financial laws are you applying. It'll do a snapshot of nine different areas of your financial life and give us a relative strength or weakness in these nine areas. What we’ll do then is we'll do what we call our financial power strategy session. We'll sit down with you over the phone or assume a meeting or whatever and analyze where you're at and basically give you some strategy on how you can immediately improve your score.
The truth of the matter is you're going to be financially successful or not, depending on how you manage your financial risks and there are 89 of them. Until you know and understand how to handle those 89 risks, going through life is going to subject you to losses because of those risks that aren't predicted. We help you do that. That analysis gives us a quick snapshot of what those risks are. We can see what's going to happen if we don't take any action.The big truth is that you are not going to make more money by being a better practitioner. Click To Tweet
Thanks again so much for being on the podcast with us, Christopher. Any other information you want to share with us, maybe your websites or any ways to contact you?
Go to Econologics.com. Econologics is the name of our system. It's a scientifically validated approach to personal financial planning. It's predictable and consistent and our Financial Prosperity Index is what gives us the start of how we can apply that to a particular system. Back in 2010, I created what I call the Private Practice Millionaire Academy. It’s a three-day retreat event where we teach basically a master's level personal financial education, a one-year master's level education. We do it in three days in fourth grade English for you.
Knowledge is power and applied knowledge is unstoppable. One of the things that we do is we have a lot of content. We have a lot of very simple concepts and you can apply them. We've had hundreds of professionals go to it over the years. We do it three times a year here in Clearwater Beach, Florida. We have them in March, July and November of each year. I like to invite you all to come to that. That will change your life and it will fill in the financial education that you never got and should have.
Thanks for the offers. I'll be looking into it myself. Thank you for taking the time in sharing your wisdom.
Thanks, I appreciate the opportunity and I hope you get some value out of some of the comments. If you want to reach out to me, please do so. My phone number is 727-588-1540.
Thank you so much, Chris.