E779 | How To Figure Out Staff Break Even

Getting Over the Fear of Your First Hire

Hiring your first employee can feel like a monumental decision. The thought of taking on a full-time salary can trigger fear and anxiety for many clinic owners. However, breaking down the numbers and focusing on achievable goals can make the process much less intimidating. Here’s a closer look at how to overcome these fears and make your first hire a strategic move for your business.

The Common Fear: Salary Burden

When hiring your first employee, the idea of paying a full-time salary can feel overwhelming. Seeing numbers like $80,000 or $90,000 a year on paper may create a mental roadblock. However, it's important to shift your mindset. You don’t need to have the entire annual salary upfront—you just need to focus on covering their costs month by month.

Understanding Break-Even

The key to making your first hire manageable is calculating their break-even point. Here's a simple formula:

1. Salary ÷ Average Visit Rate = Monthly Visits Needed
   • Example: If your full-time hire costs $7,000/month and your average visit rate is $200, they need to see 35 visits per month to cover their salary.

This means they only need to see about 8-9 visits per week. This is entirely achievable, even in the first few months.

Part-Time vs. Full-Time

If you’re unsure about a full-time hire, part-time can be a stepping stone. For example:

• A part-time clinician earning $3,500/month at 20 hours per week might require just 17-18 visits monthly to break even.

However, full-time hires often provide better focus, availability, and scalability if you have the cash reserves to support them initially.

Setting Realistic Goals

The pressure to immediately fill your new hire’s schedule can feel immense, but it’s not necessary. Instead:

• Goal #1: Get them to break even (e.g., 35 visits/month for full-time).
• Timeline: Aim to hit this within 1-2 months.
• Long-Term Vision: Over time, most full-time providers settle at 105-110 visits/month, significantly surpassing the break-even point.

The Power of Recurring Visits

Recurring visits play a vital role in building your new hire’s schedule. A strong flow of returning patients reduces the need for constant new evaluations, which can be funneled to your new clinician. This makes ramping up their workload more efficient.

Plan for Initial Costs

Expect an upfront investment before reaching break-even. For example:

• Two months of salary for a full-time hire at $7,000/month equals a $14,000 initial cost.

Having cash reserves ensures you can handle this short-term deficit while your new clinician ramps up their schedule.

The Big Picture

Hiring is not just about dollars and cents. Bringing on a talented clinician elevates your clinic’s culture, legitimacy, and capacity for growth. When you focus on achievable goals like break-even, you’ll find the process far less daunting.

Key Takeaways for Making Your First Hire

• Calculate your hire’s break-even point using their salary and your average visit rate.
• Set a goal to reach break-even within the first 1-2 months.
• Use recurring visits and effective marketing to build their schedule.
• Full-time hires often provide better growth potential if financially feasible.
• Expect initial costs but remember the long-term rewards of profitability and scalability.

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Podcast Transcript

 Danny: Hey, real quick, if you were serious about starting or growing your cash based practice, I want to formally invite you to go to Facebook and join our PT entrepreneurs Facebook group. This is a group of over 6, 000 providers all over the country, and it's a pretty amazing place to start to get involved in the conversation.

Hope to see you there soon. Hey, are you a physical therapist looking to leverage your skillset in a way that helps you create time and financial freedom for yourself and your family? If so, you're in the right spot. My name is Danny Matta and over the last 15 years, I've done pretty much everything you can in the profession.

I've been a staff PT. I've been an active duty military officer, physical therapist. I've started my own cash practice. I've sold that cash practice. And today my company physical therapy business helped over a thousand clinicians start growing scale their own cash practices So if this sounds like something you want to do listen up because i'm here to help you I'm, dr.

Danny here with the pti's more podcast and today we're talking about getting over the fear of your first hire This is actually something that we see a lot of with clients that we are working with especially Ones that are in our clinical rainmaker program is for people that are just like, they're just starting their clinic.

They're at less than, five, 10, 000 a month in revenue. Many of them are just starting. Getting started, like they haven't even formed an LLC yet. But towards the end of it, for a lot of people, they'll be at a stage where they're ready to grow and grow their staff.

And for many of them, we ended up working with them in PT biz going forward in our mastermind program. And that's where we really help a lot of people hire and scale past themself. And one of the things that we see is there's this daunting sort of salary. That we look at as employers. And I know I felt this way whenever I hired my first staff member as well, that it feels like this, massive amount that there's no way we can afford to pay for until we get a bit more clear on the numbers.

So for many people, they're either going to hire somebody part time or full time. I say more often than not. It's a full time hire full time hire equals full time attention. I think it's a better way to go, especially if you have the cash reserves to do but sometimes you can't, right? So you have to do part time.

I've done both and it can, they can both work. But either way, in order to get a better idea of your break even point with a staff member, this is a pretty easy drill you can do that will help you with a bit more tangible numbers in terms of what somebody needs to to do in the clinic, as far as visits seen in order to be ROI neutral in, in, in a simple sense.

And what I mean by that is, how many visits do they need to see to break even with this employee that you have in the business. And obviously this isn't the only thing. Your staff brings a whole nother level of culture and legitimacy and fun and a lot of really positive things.

So I don't want people to just to think that hiring people should just be about. Dollars and cents, but at the end of the day, no money, no mission. You can't really run a business without profitability. So you do need to know these numbers to some degree to be able to make the right decisions as you're hiring people and paying them.

But let's just take the scenario of a part time in a full time position. And we'll just keep it at straight salary. Really straightforward. Let's say the part time person is 3, 500 a month and that's 20 hours a week of a available time. And then the full time person is 7, 000 a month. And that is a full time work, right?

So 40 hours of of work, it's a full time job for that person. So the way that you figure out where your break even point with somebody is you take. The salary, and let's say it's 7, 000 in this full time example, and you divide it by the average visit rate that you have. So your average visit rate is the average amount that you're getting per session for a visit scene, right?

So this is including discounted visits, including. So if you don't know how to add this up, you basically want to look at the last couple of months, you want to take every visit that you have seen, calculate the amount per session that was generated not package sales, if you're doing sales, but the actual revenue earned, right?

So if you have a 10 visit package that is 2, 000, then that means each of those average visits is 2, 000, but let's say you have a 10 20 visit package. That's 3, 000. Then each visit is 150 for that, right? So then you, if you average those two out, it would be one 75 would be your average visit if each was making up 50 percent of your schedule.

So just make sure you have that number, right? Because you're going to back into salaries based off of what you're generating and you want to make sure that number is correct. Otherwise you could. miscalculate this and that puts you in a really bad spot, especially if you miscalculate it too high. Then you're paying people based on the assumption that you're making more than you actually are.

So let's assume that in this scenario, the average visit rate is 200 and you're paying somebody 7, 000 a month for full time work. That means that you would take 7, 000 and divided by your average visit rate of 200, which would give you 35 visits. So the break even for a full time person. To essentially pay for their own salary and yes, there's a taxes and there's benefits and there's other things around it, right?

But from a simple standpoint, we just want to look at their salary, breaking even they would need to see 35 treatment sessions in a month, not in a week, in a month, right? So that equals roughly eight to nine per week. Now, when we start to look at that, if you have somebody that is 40 hours of, full time work a week.

And they need to see eight to nine treatment sessions a week. There's a lot of time availability left there for that full time person to grow into. So on average, we would see roughly 105 to 110 visits a month with a full time staff member is where we would see them settle in. So even with that they're really like a third efficient for where they will end up being.

And that for a lot of people can make them feel much better because, Instead of them saying, Oh, I got to get this person's schedule full. Otherwise it's a burden on the business or, whatever no, you got to get to break even first. So step one is get into 35 sessions in a month. Okay.

And set a goal of you being able to do that within one to two months, right? A lot of times we'll see people build full schedules in their providers, anywhere between two and six months. It depends on the business. It depends on their lead flow. And It depends on their recurring sessions in a lot of ways to that's a big one.

The more recurring visits you have, the fewer valuations each provider needs, and a lot of the new ones can flow to the new provider and really help build their schedule up. So there's a lot of factors that go into that, but. You should really be able to get their schedule a third full, really realistically within the first two months.

And then all of a sudden you take a lot of the pressure off yourself because instead of there being all these additional costs in the business, there's really minimal additional costs in the business to have another full time, super smart, fantastic, talented clinician involved in your business. So worth doing it, right?

But the fear of that, the fear of the salary burden is something that scares a lot of people. And when you really look at it, so let's say. Even if they didn't generate a dollar the first two months, but then they hit break even the third month. Okay you're in a minus 14, 000, right?

So two months at 7, 000. So you're a negative 14. As that person becomes more profitable. You'll dig yourself out of that sort of negative, but you'll have, hopefully have cash reserves where you're not going into true debt. And and then you build yourself back up and you're in a better spot.

And now all of a sudden you're profitable overall. So that's the way that the service businesses work. You can't you cannot necessarily bring somebody in and they're immediately profitable. In most settings, it can definitely happen fast. But what we typically see is most people by the second month are going to be going to be break even or faster if you do a really good job.

But like I said, of lead flow and recurring visible. So if you're getting a little bit of anxiety, And stress around the idea of having to pay for this other person. And you're looking at an 80, 90, 000 salary. And you're like, Oh my God, I have to come in with 000. Nope. You just need to get them to break even.

This is how you back into those numbers. And this should help you feel a lot more comfortable about making that hire you probably should make.

Hey, peach entrepreneurs. We have big, exciting news, a new program that we just came out with. It is our PT biz part time to full time five day challenge. Over the course of five days, we get you crystal clear on exactly how much money you need to replace by getting you ultra clear on how much you're actually spending.

We get you crystal clear on the number of people you're going to see and the average visit rate you're going to need to have in order to replace your income to be able to go full time. We go through three different strategies you can take to go from part time to full time. You can pick the one that's the best for you based on your current situation.

Then we share with you the sales and marketing systems that we use within our mastermind that you need to have as well. If you want to go full time in your own practice. And then finally, we help you create a one page business plan. That's right. Not these 15 day business plans. You want to take the small business association, a one day business plan.

It's going to help you get very clear on exactly what you need to do. And when you're going to do it to take action. If you're interested in signing up for this challenge, it's totally free. Head to physical therapy, biz. com forward slash challenge. Get signed up there. Please enjoy. We put a lot of energy into this.

It's totally free. It's something I think is going to help you tremendously. As long as you're willing to do the work, if you're doing the work, you're getting a lot of. Information put down and getting yourself ready to take action in a very organized way. You will have success, which is what we want.

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