E744 | The Power Of Recurring Revenue In Your Cash-Based Clinic

In this episode of the PT Entrepreneur Podcast, Dr. Danny takes a deep dive into the transformative concept of recurring revenue and its critical role in stabilizing cash-based physical therapy practices. If you've ever found yourself grappling with the unpredictability of client influx and fluctuating income, this episode is a must-listen. Dr. Danny will break down the fundamentals of recurring revenue—what it is, why it matters, and how it can fundamentally shift the trajectory of your practice.

Throughout the episode, listeners will learn about three key areas where cash-based practices are successfully integrating recurring revenue streams. By sharing actionable insights and illustrating these concepts through real-world examples, Dr. Danny aims to empower physical therapy business owners to think strategically about their financial models.

Additionally, he presents a compelling case study that contrasts two practices, revealing the significant outcomes that can be achieved by increasing the percentage of clients enrolled in recurring revenue plans by just 20%.

Whether you're a seasoned practice owner or just starting your journey, this episode is designed to equip you with the knowledge and tools necessary to enhance your business acumen. Dr. Danny emphasizes that just as practitioners learn to excel in patient care, they can also become proficient in managing and growing their business.

Join us to discover how building recurring revenue can lead to greater financial stability and success, and don't miss the accompanying YouTube training video, where visuals will further illustrate these pivotal concepts.

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Ready to elevate your practice? Book a call at the link below with one of our expert consultants today and start your journey to delivering unparalleled physical therapy.

Podcast Transcript

Danny: Hey, real quick, if you are 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's Danny Matei 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 to date, my company, Physical Therapy Biz, has helped over a thousand clinicians start, grow, and scale their own cash practices. If this sounds like something you want to do, listen up, because I'm here to help you.

Hey, Dr. Danny here with the PT Osmore podcast. Today, we have a little intro to explain the video coming up, which is going to be one of our YouTube training videos that we're putting together. They'll drop in a few weeks. But this one is about the power of recurring revenue in your business. And recurring revenue is the business that comes back, whether you have to go out and find new business or not, it's the steady every month, every couple of months, like there's revenue coming in the door without you having to go out and find new business. Business, this is incredibly important and stabilizes your business. And I'm going to go into a lot of detail about exactly what this does for your business.

What areas people are finding success with building these into cash based practices in particular that you can focus on. And instead of being like how do I build recurring revenue? I'll give you three examples of the things that we're seeing in a service based business as a cash based practice that are working.

And also what it does for your business, as well as a case study, example of two different practices. And the difference after a year of what their actual recurring revenue looks like just by increasing this recurring revenue metric of percentage of people moving over to recurring revenue by 20%.

And it makes an astronomical difference by the end of the year. So definitely give this one a listen, look out for the YouTube videos can have all kinds of visuals with it as well that are going to explain it in more detail and visually, hopefully you'll be able to actually like. Better understand the information you can apply to your practice.

That's the goal for this is to be able to share educational resources that you can apply to your practice in the same way that you took your clinical skillset to learn how to be a great clinician. We want you to become a great business owner, just like a great clinician. And we hope this helps you get there.

So look out for that as well. And I'll talk to you soon. In this video, I'm going to talk to you about why recurring revenue in your cash or hybrid practice is a must have and how it can dramatically, not just Stabilize your business, but also dramatically increase the actual value of your business long term.

If you ever go down the path of deciding to either sell it or maybe potentially autopilot your practice. Just for context, my name is Danny Mattei. I'm the founder of a company called Physical Therapy Biz, where we help cash and hybrid practices scale past just themselves up to seven figures and beyond all over the U S and Canada.

We have to date helped over a Practices start and scale. And this is one area that I think that. Almost every practice that comes into our ecosystem to work with us really has to improve and work on. And once they get these things in place, they see a massive improvement in their business and really the ability to run the business effectively and not necessarily have to guess as much about the next steps that they can take, whether that be moving to a bigger space, hire somebody or what, whatever the next step in their business is.

And it's because recurring revenue. Is stability is the way I look at it recurring revenue is stability in your business It's the business that you don't have to go out and try to find every single month That you know is going to be there and it's going to be predictable For you and your business partners if you have any or for the staff that you have that you're looking to bring on Or maybe move into new roles So it allows you to be much more stable and make better decisions because of knowing in a more sort of strategic way what your revenue is going to look like versus The months where you may have massive volume or they have big drops and this happens seasonally in a lot of locations as well And recurring revenue can really help dial that in for you.

Now, let's chat a little bit about recurring revenue And really what that is. So the way that we look at it is really any sort of revenue that is coming back into your business where you're not having to go out and find a new customer to generate that. Now, this could be there's recurring and reoccurring revenue.

I'm not going to get into the nuances of the two. For me, I just care about whether somebody's coming back in, whether that's a true membership, a contract, or that is them, getting a plan of care and chipping away at it or even other services that don't even involve direct patient care, which I'll talk about a couple of those that we see as really strong recurring revenue drivers.

So for us, the gold standard that we want to see in a practice is really to get to the point where they're at 50 percent of their revenue being recurring revenue. Okay. That is like a bulletproof practice. If you can get to half your revenue. Being recurring that, that is going to put you in a great place.

You're going to be way less stressed out. You're going to have so much better predictability of where they're hiring somebody or you're making a bigger move and transitioning to a bigger space in the business. That's awesome. We're very happy if people can get to 30%, right? So if you can get a 30 percent of your revenues, 30 30 percent of every dollar that comes in is coming from somebody coming back for a service or something that you're selling on an ongoing basis.

That's still an incredible place to be. And it adds a lot of value and predictability to your business. Most people that we work with are 10 percent or below, and honestly, probably not even tracking this. That's probably step number one is let's go ahead and get you to track this so that you know where your revenue is coming from.

Is it recurring? Is it just one off revenue? Or would we consider like Higher ticket based, upfront revenue. It's really about figuring out what those channels are and then start tracking the right things so that we can start making a measurable improvement in the areas that we want to actually make better.

So recurring revenue, again ideal, best case scenario is half of your revenue. But if you get a 30 percent in service based business, that's actually really good still. So where does this recurring revenue come from? And there's really three options. Main options people have some variances if they have very specialized things to do in their practice, but the main areas are going to be recurring visits.

So that means people that are coming back for sessions with you for whatever it is that you do, let's say that you are a. A manual therapist, right? You're great with your hands and you can make a lot of changes positively people You know, they love and they feel better and they're able to do things.

They like to do And people are coming back. Let's say on a monthly basis to work with you as just an example You know, they either buy a plan of care with you and then they use those visits As they want or you have a structured plan in place That's maybe more of a membership style where they're coming in on an ongoing basis for a plan that you're selling And on the back end of a plan of care that you've completed.

This is the most common one that we see and probably the one that's going to make up the vast majority of revenue with this. And I'll give you a really good example of how powerful this can be. One of the first consulting contracts I took was working with a a group out of California that specifically focused on a functional range conditioning style of training.

They would take their patients through hands on stuff with a FRC or functional range conditioning approach, which you've ever done that. It's very tedious. It's very difficult. It does actually require some oversight by somebody that knows what they're talking about because it's very tedious little movements and doing it correct can be challenging.

But if you do it and you do it with guidance, you actually feel really good. Especially if you're struggling with some some joint issues, or maybe it's like end range control or pain in a joint that you can work through with somebody those are talking about and this group that, that I took his contract with they, that was their approach.

They heavy in FRC sort of approach. And. per provider. They only needed something like four new people per month in order to maximize or saturate a schedule. And the reason was everybody that they worked with would come back in basically on a weekly basis forever. Almost as if they were like their, specialized trainers to do this.

FRC plus a little bit of hands on style approach that that they would position as just a part of their sort of their training, honestly. And it snowballed so fast. And it was amazing to see, to be able to have people move this direction and commit to, visit a week and in a lot of places and they were in an area that was a sweet spot from a health conscious affluent sort of area where people would pay 250 a week to come in and work with them, once a week to do this style of training.

For them, it was awesome. And the recurring side of their business was probably 70% of where they were at. And they snowballed so fast into the day that like this business is actually doing really well. And they've grown a ton. So just as an example, instead of having to try to find 12, 15 people.

If you're, not keeping anybody around, they only had to find three or four. And I think about that for a second, which one do you think is going to be easier for you from a lead gen standpoint? Obviously it's going to be, finding three or four people versus 12. So that's recurring visits.

That's a big one. The second one is group training. And personally, I think big group training, I don't think is the best fit for clinicians. Not to say you can't coach it, but in your facility, you probably don't have the space for it. But small group or semi private training is a, is an option that we see a lot of clinicians be able to do really well with.

And in that example, it would be, You know a small group of let's call it four to six people and you have somebody that's running that a class that they're gonna all train in together It's small enough that you can individualize a lot of things, you know Everybody's name you can modify things on the fly for them, but you can build a general program that's going to be you know, really catch everything that they you know that they need to do And from there, you can develop a recurring model that brings them in once a week, twice a week, three times a week, whatever it is that you want to do, however you want to set it up.

And you can have a clinician or coach that's fulfilling on that, which is great because it gives you some flexibility and how you want to fulfill that. The margins on that can be really good. It depends what you charge per session. We're seeing people charge anywhere between 30 and 80, sometimes up to a hundred dollars per person, per session, depending on their area and depending on the niche that they focus on.

So you could have a great, hourly rate, a total rate. Let's say you have five people that are coming in at 60 bucks each. You're generating 300 for that hour, which is really good. Obviously in comparison, most people's single visit rate is not that high, so it can be great. And it's also a very sticky service, something that people will come back and they'll train with the people that they're getting, to know.

Misery loves company. It's very sticky and it's something that can be a bolt onto practices. It adds a decent amount of recurring revenue. And even a couple of these small groups can literally add, thousands, if not tens of thousands of dollars of recurring revenue to your business on a monthly basis.

The third part is remote coaching and remote coaching would be you managing people via technology and maybe it's even like virtual check ins with like a zoom interaction or something. Like that, or maybe it's a combination of face to face and remote coaching. You can set it up a lot of different ways.

You can have a clinician fulfill this. You can have a coach fulfill this. There's a number of ways you can do this. It really depends on how you want to set it up. And there's not, I wouldn't say a specific gold standard. Some people love to have a visit on a, monthly basis, or maybe it's every other month.

And then they're managing their program remotely. Some people want to do all remote and they want to be able to like have a lot of communication in between with people. Some people want to have more generalized blanket programs that are cheaper and that they're, they have fewer touch points.

It's up to you in some ways. I will say for us, what we found is being able to have a a remote option is great, especially for people that are traveling quite a bit for work or people that have a home jet. And a lot more people have home gyms now than they did prior to 2020. So when we look at remote coaching, it's definitely an option.

And when we had our practice and even to this day, cause we, the practice that we that my wife and I started, we started in 2014 and we sold it two years ago. So it just had its 10 year anniversary actually. And they're doing great and they. They still practice these three variables of recurring revenue.

So they have recurring visits that are part of the sales process. They have group training and they have remote coaching. And what's nice about this is you can actually feed people into things that are a better fit for them. And by doing so, you have more options for. The back end sales process that allows you to have an increase in Percentage of that revenue that is going to say yes to it, right?

And then it's going to generate recurring revenue for you So I actually like to have a combination of all of them. You may not have the capacity to do that you may just need to focus on one to start with and I don't think you should do all these at once if you don't Have as complex of a business or as a type of business systems to be able to run these things and fulfill them Then I would say focus just on one thing in particular focus just on recurring revenue That's the easiest thing you can do, and you can do either a structured membership or it can literally be, Hey now that we've solved this problem, what do you want to do next?

What's your physical goal? What's something that you want to work towards? Let's spot, let's get another package. It'll be a better rate procession for you. And then let's just chip away at it over this amount of time. I think it'll take about that long for us to get to this goal, or this is when this races, and then now all of a sudden it's.

Not just, I solved this pain problem, but now we're working on an athletic goal of some sort or, some sort of goal that they have that they want to achieve. It's also an opportunity for you to do this with friends and family or really more family and kids. And you can say, all right, cool.

With this plan of care, if you're paying, if your family, which is active, like your kids are playing sports or, your wife trains, you train, whatever And that is one of the best ways that we found to generate recurring volume is through active families, which are awesome because they also work with and hang out with other active families, which are a great referral source for you in a number of ways.

So I would say focus on the recurring visits first before you do anything else. The other things are much harder to fulfill on because you don't really have those things set up. But very doable. And if there's something that you decide, man, I want to try to engineer these things into my practice.

I have the space for it. I have the people for it, showing them how to do that. These are things that we help people with all the time. You can head to physicaltherapybiz. com, check out what we do. But this area right here is one of the areas I think that we do better than anybody in terms of really establishing a model that doesn't, it's not predicated on solely just get more new patients in.

Okay. It's literally build a better business, build a better business because it's not just the front end business. It's not the revenue you're making. It's also the value of the business. And I'll explain that in just a second as well. So let's talk about why recurring revenue is so important.

And we've touched on some of these things, but the really huge one as a business owner. And I think this is, for me, such, I can't overstate how great this is the stress factor of not being so dependent on new volume is a life changer for outside the clinic. Okay. When I was just, getting tons of new patients and they were all basically seeing me for three sessions and then I would never see them again because I gave them no reason to come back in.

It was very stressful. I had months where just by myself, just myself, I would see 25 plus new patients and I would have, not a lot to show for that, right? We had one year where we had over, I think it was 550 new patients in a year between two providers. And we had almost no recurring revenue because we didn't actually have anything built in.

And if I could go back and tell myself one thing when I was doing that, it would be, Hey, dummy, give these people a reason to come back and see you because. Like they have other things to work on. And what's interesting is that they may not want to tell you like, Oh, I'd like to train for this 10 K or whatever.

Like you need to ask these things and see what they want to do and see if there's a fit for you to be able to help them. And being proactive about things. It's a great approach. Like we've done this with, professional organizations and athletes and people that are competitive, but the average adult, the daily weekend warrior the, this executive athlete, the person that is just trying to live a healthy life.

They don't prioritize that as much. And frankly, they probably need it more because they just don't have the support or the knowledge around them. And that's where we can fit really well. So recurring visits are great place to start, but it decreases your dependency on new volume. And that is a way better business to run.

And it's going to decrease your stress levels a ton, which allows you, honestly, To be able to be more present with your family, to be able to be a happier person in general, outside of your business. I can tell you, if your business isn't doing well, I can promise you, you're not the most enjoyable person to be around.

Like it's hard to compartmentalize that because it affects basically everything. So that's one big one. Enterprise value is another huge one, and this is really interesting. And this is something that I don't hear enough. I really don't hear anybody talking about this in our industry. Mainly because.

Not a lot of people have actually bought or sold cash based practices in particular. And we've done this a lot. I've done it myself. I've helped other people do it and It's interesting when you look at the way that investment bankers value businesses. So for me I've had the opportunity to now, sell and or acquire multiple businesses and help a number of businesses sell, not just in the cash PT world, but outside of it as well.

And what I thought was fascinating is I started to really dive into the world of investment bankers and investment bankers are basically just that. They're not actually at a bank giving, loans out or something like that They're basically they're trying to do deals They're trying to raise money to do deals potentially or they're bringing deals to market think of them like a realtor for businesses Okay, that's basically what they are more so than anything and with investment makers, with one of the main things they look at is what percentage of the revenue is recurring revenue.

Hey, sorry to interrupt the podcast, but I have a huge favor to ask of you. If you are a longtime listener or a new listener and you're finding value in this podcast, please head over to iTunes wherever you listen to the podcast. And please leave a rating and review. This is actually very helpful for us to get this podcast in front of more clinicians and really help them develop time and financial freedom.

So if you do that, I would greatly appreciate it. Now back to the podcast. This is why when I go back to my, my, numbers, if I look at this, this is why for me, if I know we can get 30 percent recurring revenue in a business, it's going to be worth a lot more to one of these one of these investment bankers can be worth a lot more to a business or a bank if they're going to give somebody a loan to buy that.

So you can increase the value of your business and. And long term like you may just be starting your business. Maybe you're further along in your business, but Most businesses will never sell they have no value They're not worth it to anybody else enough for them to buy it and it is It's really sad to see because you put so much effort and work into these businesses that truly do Have value if built the right way And can create like generational family wealth for you and your family.

They can definitely create the incredibly comfortable retirement for you at a minimum. If you do this the right way. And enterprise value is essentially what that business is worth to another buyer. Recurring revenue increases the revenue increases the multiples on that. Meaning for every dollar that you have that is recurring it's valued at a higher valuation, a higher multiple than the business that is not recurring.

So let's say you have 50 percent of your revenue is recurring and you have let's say, A million dollar business that is generating three hundred thousand dollars in net revenue And they're going to look at that net revenue as what they're going to value the business on Let's say you have three hundred thousand dollars and there's zero recurring revenue coming in now You're going to get a lower multiple let's say they're valuing these on a three to six sort of times multiple of your net revenue So in this scenario, if it's three hundred thousand dollars, then it's going to be three to six times that so on the low end 900, 000 on the high end 1.

8 million, right? So basically double. If you have half your revenue coming from recurring revenue, you're going to be on the upper end of that multiple scale. If you have no revenue coming from recurring revenue, you're on the lower end of that. So in this example, if you have a a business that's doing a couple of hundred thousand dollars in revenue, if a good chunk of it is recurring.

You can damn near double your business value at the sale in comparison to not having any value that is any revenue coming from recurring revenue. So when we look at this can, let's call it 1. 5 to two X, what you get for this business. Like it's, it could be massive, to go from, let's call it a 900, 000 sale to let's say a one and a half million dollar sale.

That's a huge difference for something that also makes your business better to run, which is why they value it more. It makes it easier for them to run the business. They make it easier for them to put somebody else in your business to be able to run it. So keep in mind, you're not just doing this for no reason.

You're doing this because A, it's going to help you. Have a more stable business, but also it's going to make your business worth more money Okay worth more money to any outside investor or any person you would sell it to Or any business, bank that you may need to get a loan from right? Just makes your business look more robust and harder to ruin essentially, right?

That's why so predictability is the other big one This is one issue that we see a lot with people is They don't know when to hire. They have a hard time understanding when do I hire? Do I time it right? Sometimes it's a guessing game, right? We know we want to see certain metrics of density of schedules before people will go to hire.

But there's seasonality in all businesses and the thing with recurring revenue is, you have a base of revenue that is going to be there no matter what, like that's going to be very stable. And it may fluctuate up and down a little bit cause there is churn, but it's going to be a lot more stable than If you're just dependent solely on new patient volume.

So this allows you to be more predictive of people you're hiring technology, you're reinvesting in spaces, you're moving into any number of things that are going to be big business decisions that are a bit scary to do. This allows you to have a more predictable manner of making the right decision.

And for you to have sort of a safety net of. Revenue that's there in case it takes a little bit longer for you to prove that business decision was the right thing. Bring somebody on for instance, right? If you bring a new provider on and maybe your new patient blog doesn't grow as fast as you thought it would.

But you're not in such a bad spot where you have to let that person go because they're cannibalizing the schedules, everybody else, because there's so much recurring revenue. So this really helps you make better. Decisions and more predictability. The last thing would be lifetime value. And this really is the same thing for me as enterprise value.

Because this is another big metric that people are going to look at, like what's the lifetime value of one of your patients, one of your clients. And, there's interesting stats around something like Starbucks. This is crazy. So Starbucks, their lifetime value of a customer is it's something like between six and 7, 000.

So six to seven K. Okay. Is starbucks lifetime value think about how many cups of coffee that is that's a lot if you don't know your lifetime value as a customer, that's something that you should start to calculate which is basically On average how much money is somebody spending with you over the time that they're a client?

And if you have a newer business, it's actually really hard to calculate Because you just don't have that long of a history of being in business But if you've had a business for a few years go back in look at how many clients you have look on average How much they've spent with your business over that duration of time and that'll give you a pretty clear idea of what your lifetime value is But if you look at lifetime value It's basically a combination of both front end and back end services in this example for these type of businesses that people are spending money on.

So if you have a plan of care, this was a thousand dollars and you have nothing that anybody can purchase outside of that's it. And then you discharge everybody, your lifetime value is going to be, let's call it a thousand dollars. If everybody did that, which not everybody's going to is actually be lower than a thousand dollars.

But in this scenario, let's just say it's a thousand bucks. Okay. Let's say you have. A front end program that's a thousand dollars. So your plan of care initially a thousand and then you have a back end program That's a thousand dollars where they work with you for another year to work on performance goals And everybody does that as well You've doubled your lifetime value That means each customer is now worth twice as much as they were when you just have a front end plan of care option that's important to know Number one, if you have, if you're looking at what the business is worth, that's very important.

Also from a marketing standpoint, it's incredibly important. If you said, okay, I know a customer's worth a thousand dollars to me versus a customer's worth 2, 000 to me. You can spend more to acquire a customer, knowing that information, knowing that you have that backend revenue than the person that only has a thousand dollars of lifetime value.

Because that customer's worth twice as much to you. So maybe we say if, let's say you have a thousand dollars lifetime value, you're willing to spend $100 to acquire a customer versus somebody that has a backend, recurring revenue service. It's, they have a lifetime value of $2,000.

They're willing to spend $200. The person that can spend more on marketing wins. That's how it works. They can get their advertising in front of people more. They can do more workshops. They can do more local marketing where they're sponsoring races. They can spend more money to get in front of more people and over time they're going to be more visible.

They're going to win assuming their product is equivalent, right? So lifetime value increases your ability to actually spend money to acquire people. So it's a big deal. And I'm going to show you an example of two clinics that are, um, generating recurring revenue. at a different percentage and just how big of a difference it ends up being.

So let's say clinic one, we have 20 new patients, okay, 20 new patients. We have a 10 percent transition to recurring revenue. So of those 20 new people in that month that are coming in, 10 percent are moving over. So let's just call it a one time a month. So a one time a month. All right. So they're coming in once a month.

That means if you have 20 people to come in, two people are moving over to a recurring visit, and those are going to snowball. So first month is two, then it's four, then it's six. And we're gonna look at this for the year. Okay. So two a month. And we're also going to assume that no drop off, which there will be drop off.

That's called churn. That's people that are. That are deciding they don't want to continue on with ongoing services. That's normal. But in this scenario, we're just going to leave it as for this year, they have zero turn in both scenarios. Okay. So after 12 months, you're going to end up with 24 recurring visits.

So that would be. 24 visits that are coming in that 12th month or after that 12th month that are going to be on the schedule, no matter what you do any marketing whatsoever, you have any social media presence, website, nothing, they're just there, right? They're there. It's stability in your clinic.

If your average visit rate, let's call it 200 is is where you're at, then that's going to generate 2, 400 in recurring revenue for your clinic. On a monthly basis at that point. 2, 400, which isn't bad. Okay. It's a heck a lot better than not having anything. I said a 10 percent conversion percentage to your recurring revenue option, which in this example, we're going to say is just a one visit per month.

So clinic two, they're going to get 30 percent of people that are going to transition over to that. So they have a 30 percent conversion percentage over to a one time a month visit, which means they're going to generate. visits per month. So 30 percent of the 20 people that are coming in, which is six are going to move over to one visit per month.

So they're generating six visits per month for every 20 visits or 20 new visits that they bring in new patients that they bring in turn into six longterm patients. All right. So that times 12 months is going to give us 72 recurring sessions, recurring visits on a monthly basis. 72 times your average visit rate of 200 is going to give you 14, 400 in recurring revenue.

Now, keep this in mind. This is really important. You have the same number of new patients. This is the hardest number. To thing to do in a business to generate new volume is the hardest thing to do. It's what stops people from starting clinics. And it's one of the reasons why people go out of business is because they can't on a continual basis, acquire business like new clients, new patients in their actual business.

So when they're there, it sure as hell makes sense to try to make sure that you give them a reason to stick around. It has to be a value by the way. It just can't be. You just throw something at them you think that they want like they have to actually want it And they have to see value that it has to make sense on both sides.

That's the only way a recurring visit volume works or any sort of recurring service that you have But if you can really understand this you can really engineer in the appropriate way to sell this Which is very different than selling a front end plan of care Then you can 3x the conversion of moving people over to ongoing visits.

But it's not a 3x. It's not a 3x of your actual revenue. It's way more than that. It's basically a 6, 7x. And it's because it's compounding. In a positive direction, whenever you have recurring revenue, it's snowballs. And that is the biggest difference that I want everyone to understand. If you're watching this is what I'm talking about of why recurring revenue is so valuable to outside investors, why it's so valuable to, investment bankers or people that want to buy businesses and it's why it's so valuable to your business is because with.

More effort at trying to move people on the recurring revenue side and you can improve your percentage by 20 percent Which is not a massive difference by the way I'm, not telling you i'm not saying that you've gone from 10 to 100 You've gone from 10 to 30 But at the end of a year you have six to seven times more recurring revenue In your business by improving this one lever, this one area in your business.

And this is the whole game of business, by the way, this is it. It's what areas are we, do we need to engineer? I need to understand the model across the beginning of the relationship, the new client to literally lifetime value ongoing. Just on the sales cycle then it's people and hiring and it's your culture and it's space and all that There's all these variables, but when it comes to your sales cycle and your marketing, it's very mathematical And if you can understand where these drop off points are and you can start to engineer small changes in all of these This is where we can see somebody go from a practice that's generating A hundred thousand dollars barely, and they're working their ass off to all of a sudden They're at a half a million dollars and they're working less and it's because they've focused attention on the right things And we look at these recurring revenue of this Ask yourself which one would you rather have because you have the same number of new people coming in But your recurring revenue is six times higher.

If you do a better job of recurring, that's your payroll. That's literally overhead and admin and a physical therapist right there in recurring revenue, just by you working on this one variable. And that's why I'm so adamant about people understanding the whole cycle and not necessarily just focus on new patients.

That's what I get more than anything. And that's fine. Cause that is a really important constraint in the business. But if you are just focusing on the front end, You're an amateur. You don't understand what you're talking about. You are missing the bigger picture here of what real like value drives in a business in terms of being able to have ongoing services, recurring revenue.

And more importantly, keep this in mind, you're missing out on the opportunity to help somebody in with a long term health and wellness change. Our health care system is fucked. Let's be honest. Like it's not good Have you ever gone to the doctor recently? Have you gone to a hospital? What kind of information are you getting?

It's reactive. Many of my friends are physicians. They don't like it either They don't have time with people. They don't have the opportunity to talk to them about Drinking more water and sleeping and managing stress and moving. But guess who does we do? We have an opportunity to talk to people about that.

So we get a chance to have a business that is a great business to own that can literally provide a great life for you and your family. And on the flip side of that, you get a chance to change someone's life forever. Not to mention the people in the ecosystem around them that starts to see the health changes that they're making their brother their spouse, their their kids.

They're neighbors. They start to have a positive effect on everybody else around them. So yes, this is a business But it's bigger than that. It's more important than just a business It's more important than just the numbers on the page That means you have 72 people that are coming back in on a monthly basis that are getting healthier That is an astronomic value that you're adding to your community.

And yeah, you're getting compensated for it And it's not a nonprofit, but man, it feels like it's sometimes it feels like the mission is so awesome. And it's so personally rewarding that the fact that we get paid for this is just like it, what an amazing combination. So understanding how to run a business and the people that you're helping and how you're helping them longterm, they go hand in hand.

So sometimes you got to get over the, how do I sell this? I don't like to talk to people about money. My staff doesn't like to talk to people about money. Think about what I just said. Think about the changes you're actually making with people and they probably feel very compelled to want to help them make those changes too.

And you can't do it if they don't come in and help you sit that simple, they've got to come in and help you. So in summer, I'll wrap this up. Cause obviously I got a little, I get a little he didn't off track there. Recurring revenue. There's a few big reasons. That you're going to want to do this.

Number one, it's going to make you less dependent on patient volume. It's going to increase your enterprise value meaning what your business is worth at the end of the day when you decide Maybe I don't want to do this anymore. I want to sell it I want to move on to something else or I want to find somebody to come in and you know Run the business as a clinical director or something like that It adds value to the business in a huge way.

It allows you to be more predictable with hiring And it increases lifetime value of your clients. It was another huge metric when we look at enterprise value in the business. The three areas that we see that are doing well currently with these types of businesses is recurring visits. So recurring visits, group training, and remote coaching.

Pick your flavor, which one do you like, right? Which one do you want to do? The easiest one to implement in most practices is going to be some variation of recurring volume. There's just going to be business that you're already doing anyway, just to get to have a bit of a different conversation with people, work on a bit different, skills and movement skills and information.

That's going to be more like wellness performance related and a little bit less of solving like a pain problem. And then really try to shoot for 30 percent of your revenue. Ideally if you can get to 50%, That's huge. That's enormous. And don't forget that if you can increase your your recurring revenue from 10 percent to 30 percent in the course of a year, you can six to almost seven X the amount of recurring revenue that you actually have in your business at the end of the day.

So hopefully this is enough for you to really sit there and think, man, I need to definitely start to work on adding recurring revenue to my business. It's a game changer. It's the number one thing I talk to, people about that don't have this in their business, which is basically Everybody very few people do it's the number one thing I would go back and tell myself Back in the day whenever I was in a windowless room in a crossfit gym starting my practice not knowing a damn thing about what?

I was doing and I wish I would have known because my practice would have grown a lot faster And I would have had a lot more stability and security in the revenue that was generating And if this is something that you're trying to figure out on your own, by the way This should be a great place to start.

If you want to get some help and actually implementing this with people that are doing this across the country with literally hundreds of clinics actively right now, and also sharing best practices of all those together it's equivalent to being in a franchise, but we don't own any of your business.

We are. Partner level working with you without actually being a partner in your business. It's the most fair way that we can actually work with people where we feel very tied to your business But we don't own it and we're trying to help you actively grow your business to where you're adding enterprise value and achieving the goals That you have as well as leveraging best practices from all these different Demographic areas from all over the country that we see on a monthly basis as we look at what's working And pulling those best practices together to then share internally with everybody that we work with If that's something that you're interested in, head to physicaltherapybiz.

com. Check out what we got going on. You can read a bunch of, case studies and testimonials of different people that we've worked with. You can read our backgrounds. I'm a physical therapist. I went to school to become a physical therapist. I practiced as a physical therapist for over a decade.

I taught continued education for other physical therapists before I got into helping anybody with disabilities. business. It's not necessarily the path that I thought I would be on, but I think it's the place that can make the biggest difference. So if you are interested in working with a company like that, it has, a lot of integrity and how we work with people hold herself to a high standard and expect a lot of you as well.

You can't just work with somebody and not do the work yourself and expect there to be a change. So if you're willing to do work and you're willing to make a change in your business, you want to be around a bunch of other people that are trying to live a happy, healthy, wealthy life like, like we're doing.

And we want to try to help everybody else do. Okay. Then check it out. Maybe we're the right fit for you. And if that sounds like the absolute wrong fit for you, great. That's cool too. I'm sure you'll find your people but better to find it, them somewhere else because that's our goals.

That's our core values. That's who we work with. So as always, I appreciate you watching. Hopefully this helps and let us know if we can help you in any other way. If not, see you in the next video.

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