Guest Blog: 5 Financial Steps to Take Right Now for Your Direct Care Practice (2024)

Meet Jim Kirk of Rocky Mountain Financial Solutions

Hi, I’m Jim, President and Financial Advisor of Rocky Mountain Financial Solutions. I began investing my own money in high school, and professionally as a financial advisor in 2007. I started my own firm after a frustrating and confusing experience with a large national company. RMFS provides an easy, efficient, and client focused experience. In this blog post, I address five areas that make a strong foundation for you and your practice as a DPC doctor.

Starting and running a practice can be overwhelming. Especially if you are a one-person operation. You spend the day making hundreds of decisions to improve the lives of your patients. Then you make business decisions regarding marketing, CRMs, practice efficiency, billing, where and when to expand, who to hire, etc. How will you have time or energy to wrap your head around all the nuances of finances? That’s a lot to take on!

There are five financial steps you can take to provide your practice with a solid foundation. Everyone’s situation is different. Once you have a thorough financial exam with a financial professional, then you can decide what areas to prioritize that are best for you.

1. Cash Flow Analysis

Maybe you just started your own Direct Primary Care practice or you have been in business for a decade. Reviewing your cash flow for efficiency is important. How do you plan for expansion if you don’t know where you are today? Know where you are at and where you can go with your finances.

Debt management - repayment of debt (business, student loan, SBA, etc.) is good. But it doesn’t have to be done all at once. Nor does it need to be prioritized over other savings options. Having a debt repayment plan can smooth out cash flow and potentially put you in a stronger financial position.

Are you maximizing your cash flow efficiency for your practice and your personal finances to most efficiently build your wealth?

2. Cash Reserves / Emergency Fund

If you wait until you need cash to start building an emergency fund, chances are it’s too late. Stashing cash away for your business, and personal, can be vital to a successful business plan. Cash on hand supports the opportunities for growth, new investments, or an emergency. All of which can be utilized with liquid, accessible cash - lowering the anxiety and stress when cash is needed.

In the event of a $50,000 emergency, what would you do? What accounts would you liquidate to cover this cost?

3. Protecting Your Assets

You went to school for a long time. You put your time in as a resident to train and become a professional. Now, you are making more money than ever before in your career. Have you protected your income and your business? For example, let's say you earn $200,000 and plan to work for 25 more years. Does it make sense (assuming your income stays level the entire time) to protect this $5 million dollars of earnings? Doctors know this better than anyone, accidents happen - be prepared.

Think about what would happen if your income were to stop as a result of an injury or illness. Do you want your lifestyle and business to stop as well?

4. Saving for the Future / Retirement Planning

You love your work, your business, and career. However, you might not want to work 60, 70, 80+ hours/week forever. Eventually, you may want to step aside and enjoy the fruits of your labor. Saving some of your income to grow while you work is ideal for doctors who envision an active retirement lifestyle. You may be a sole proprietor or you have a support staff for your practice. The good news, there are options for both practice structures for you to take advantage of and save for your future retirement lifestyle.

Do you know exactly how much money it's going to take for you to be able to retire comfortably? And to remain comfortably retired?

5. Diversifying Investments

You may quickly max out your spending for practice growth and retirement savings for the year. Additional cash flow can be saved in investments to diversify your portfolio, away from your practice, and help you reach your financial goals.

How would you save for a second home (think ski condo, lake house, cabin in the woods, etc.), or achieve an early retirement?

There is a lot to consider when it comes to planning finances for yourself and your practice. To reach your desired lifestyle and financial goals, surround yourself with professionals who support your best interests, make a plan, and stick to it!

Learn more about the services we offer at RMFS or get a free 'second opinion' on your current financial plan.

This post is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers. This is not a solicitation or offer of service in states we are not licensed in. Rocky Mountain Financial Solutions Inc. is a state Registered Investment Adviser. Our current Form ADV Part 2 disclosure is available for your review upon request. Past Performance is no guarantee of future results.