EPISODE 422: Scaling Smart with a Fractional CFO with Tim Hawkins

Hey, chiropractors. We're ready for another Modern Chiropractic Marketing Show with Dr. Kevin Christie, where we discuss the latest in marketing strategies, contact marketing, direct response marketing, and business development with some of the leading experts in the industry. 

Dr. Kevin Christie: [00:00:00] Hey docs. Welcome to another episode of Modern Chiropractic Mastery. Today I'm excited to bring Tim Hawkins to our episode, and he is a CFO. He is a, he does some fractional CFO work, and we'll describe what that is. And he has a unique expertise in the chiropractic, uh, profession. And so we dive into a lot of things about financial forecasting.

And really the, the theme of what we dive into is, is knowing when you can scale from one location to multiple, but. It's not only about that in this particular episode, so if you're not looking to do that, you'll still get a lot out of this. And we talk about certain things like profit margins and cash flows and forecasting finances and all the things that go into it.

And a lot of you may have an accountant, um, and you have a bookkeeper. Those tend to be. Kind of after the fact professionals oftentimes, right? Like so they do your taxes or do your books. Uh, but what a CFO does is actually help you predict and project your finances and help you with growth [00:01:00] decisions and not just, um, do your taxes, right?

So we dive into many things. Uh, that a chiropractic practice should consider as far as their, the financial health of their practice. And, and we even dive into the personal life a little bit because as a small business, you and typically a pastor entity, really your business and your personal is, is all one in a, in a lot of ways, obviously not legally and not in your accounting, but if you spend too much money in your personal life, you might drain your business to support that.

Or if you spend too much money. In your, , business or you don't make enough money in your business, it's gonna impact your personal life as you know. So, um, yeah, I thought it was a really wide ranging good interview with Tim Hawkins. And so, without further ado, here is our discussion on leveraging finances and scaling to multiple offices, plus all other things CFO.

 Alright, I got Tim Hawkins on the show today and excited to dive into, um, you know, what a fractional CFO is, how that can help a [00:02:00] practice, uh, when you may, uh, you know, certain things you need to understand for your one practice and then when it might be timed if you wanted to open up a satellite office or a second location or even scaling further from there.

But before we dive into those, uh, topics, give us a little lay of the land, Tim, where, where you're located, what some of your backgrounds, some of the work you've done with chiropractors.

Tim Hawkins: Sure. Thanks Kevin. Um, I'm located just outside of DC and Virginia. Um, that's, that's our core base. But you know, we've, we work with people across the country, few, uh, foreign countries as well.

Um, been working with chiropractors for, gosh, 10, 12 years now. Nice. Nice varying sizes, you know, multiple clinics, individuals, solo clinics, um, across the board, other medical practices as well. So seeing some of the similarities there. How that transfers over to, you know, wisdom around the, uh, uh, the chiropractic world and,

Dr. Kevin Christie: yeah.

Yeah. That's awesome. And then, I guess let's set the tone. [00:03:00] Define for us what a fractional CFO is, because I know a lot of chiropractors would love to have A-A-C-F-O for various reasons, and, you know, not being the nitty gritty of all the finances and obviously hiring a full-time. CFO usually commands some well into the six figures, and there's certain things out there that we're seeing now, whether it's CFO or CMO, like marketing person, uh, you know, VAs virtual assistants that you can do kind of a fractional, um, situation now.

So what, what would you, how would you define fractional CFO and what would a chiropractor look for in that role?

Tim Hawkins: Absolutely. Um. It, it's, um, what, what happens a lot of times, and this is traditionally what happens with small businesses mm-hmm. Is, um, you, you kind of, you'll have a bookkeeper, you know, those debts and credits and those invoices need to go out and those revenues need to be collected and counted.

And then you'll oftentimes have a tax accountant and you lull yourself to sleep saying, okay, I've got the financial accounting world [00:04:00] taken care of because I have these two things. What you're missing there is, is the next level of reading what the business is saying to you. One of the core ways that, that your business and your operation, your organization will talk to you is through, um, through its numbers.

And it's really hard to connect the dots if you have the training of a bookkeeper or mm-hmm. And, and again, a tax accountant who maybe traditionally used to do some of that work, they're so focused on code and they're so busy as. Any, if you have a good tax provider, you know how busy they are that this, this stuff gets lost and so things will sneak up on you because you're not listening to what the business is saying.

So when you bring in a fractional CFO, we don't have to be there every day, but if your operation's not that big, you can certainly have us there even once, twice a month. Kinda look at what these numbers are, make sure you set financial disciplines around your processes on accounting and finance, and then get you accustomed to looking at.

Key [00:05:00] ratios, um, either specific to your, to the industry and like what's happening with your patients and your provider utilization, but also then pulling it back. What does gross margin mean? What's EBITDA mean? Why is that important to me? And that you as a chiropractor, you can totally understand that, that that's well within your realm.

It just takes consistent conversation around it, and then you will start to use those tools. Um, to make better decisions. So having a CFO and doing that kind of a, a fractional thing really makes a lot of sense today, and it really helps people have an, you know, impact on health of the business.

Dr. Kevin Christie: Yeah. You know, I think, uh, I've been practicing for 20 years.

I've been owning my own outright for 15 years, and I just now feel like I'm getting the beat of it. Uh, I'm not, not an expert by any stretch, but I, I do have 15 years experience in my practice, and I've made plenty of mistakes. And, you know, I've done a, a lot of, uh, fortunate, a lot of interviewing of experts like yourself and, and things of that nature.

And I start, I, I would say, I finally [00:06:00] understand. What a healthy practice is financially. And, and one of the, um, one of the sayings that I often reference from Westgate is, uh, volume is vanity. Um, profit is sanity and cash is reality, right? Because a lot of people get concerned, you know, they might read their p and ls at the end of the year and it says, uh.

You know, profit of $75,000 and you're like, well, where's that $75,000? Right. Um, and so that's, uh, that's different than actual $75,000 cash profit on a p and l looks differently. And so people get very confused with that. Um, what are, what would you say in that regard? I just want to, it's kind of a sidebar topic, but, um, on that profit and loss at the end of the year when, when someone sees that.

A number and they say themselves, wow, I actually was profitable, but I don't feel like I have any money anywhere where to go. Uh, what, what's the reality behind that?

Tim Hawkins: Absolutely. Um, so the first thing I'll say on that [00:07:00] is, is the way the hair stands up on the back of my neck. When you say, I. At the end of the year when you look at this number, so one of the big things that I bring into this is

Dr. Kevin Christie: mm-hmm.

Tim Hawkins: By that point, it's kind of too late, right? Yeah. Mm-hmm. So, um, and that's the difference between, I'll say, accounting and where bookkeepers typically lie and, and accounting controller type things lie, they look backwards to make sure that data's accurate, the finance and the CFO is gonna be looking forward.

So, um, where, where that goes. So I would wanna be looking at this monthly, at least quarterly, but monthly we should be driving home what we're seeing. And, you know, what your end of year is gonna look like. Probably by September, if it's calendar year. Um, you know, we we're, we have a good handle on that. And so where that goes is, there's a lot of other things happening.

There's ar that's maybe not being collected. Mm-hmm. Um, you know, there could be equipment purchases that end up. Capitalize on the balance sheet that don't flow through to your profit. Um, and then, [00:08:00] um, things like paying down debt. Mm-hmm. Um, owner distributions. Things that are happening on the balance sheet will absolutely affect cash, but won't necessarily show up on a, you know, on a, a good accrual p and l in your profit.

And

Dr. Kevin Christie: I, I'm glad you broke that down. And, and I wanted to just start with that for people 'cause it does get confusing and then I think it helps us set the tone for where A CFO um, really stay. Uh, really just plays a key role because one of the other things I've, I've said a lot of times is often. Your accountant is kind of the postmortem of the situation, right?

Like, right, okay. It's February, I'm getting to your, uh, 20, 24, uh, numbers and we're gonna file your taxes. And it, it is what it is, right? Like they're, they're kind of doing the postmortem and then obviously submitting things to IRS. Uh, and, and that's, uh, a huge thing that needs to be done. And there's not discounting that.

Uh, but very rarely is the accountant, unless they are designed as a. As A-A-C-F-O, I would, I, I guess, um, [00:09:00] would be really helping you project to say, you know what, yeah, your parameters are are pretty good. Like we just wrapped up Q1 of 2025, obviously as we record this. And so Q1 can, can tell you a lot of things.

And I know for me, I looked at, okay, what was our operating profit margin? We have some goals there and we hit that, uh, was our payroll, uh, within certain parameters that we like and we didn't feel like we were overstaffed or understaffed. Um, you know, cer certain variables there. Obviously we look at revenue and we look at certain things there and we can, uh, start to monitor if we're on the, on the right track.

Um, do you find that Q1, like kind of looking at Q1 can really help set the tone for the rest of the year for, for a practice?

Tim Hawkins: Absolutely. I, I think, um. Was key word there is around budgeting, right? Mm-hmm. And looking at those quarters, so I, I think you use whatever quarter just ended via Q1, Q3, and you're rolling forward, [00:10:00] what's this gonna tell me over the next two to three quarters?

So, um, every quarter matters. They're all very similar. If you have seasonality, understanding that by knowing your quarters is gonna be huge. Mm-hmm. Um. Don't see that as much here, but sometimes, sometimes we do.

Dr. Kevin Christie: Can I, can I say, can I say something to that? 'cause I was, I'm really glad you brought it up 'cause I was gonna mention it.

I'm down in south Florida in Boca Raton, which is, would be kind of like the, the Disney world of, uh, snowbirds. Right, right. And it's, uh, I mean we're just way busier Q1 than we will be any other quarter. QQ four is, is good as well, but I. I looked at Q1 profit margin and revenues and things and said it needs to be like, let's just make an example.

Let's say we wanted a 15% operate, you know, profit margin by the end of the year. If I would've been at 15% or 16% for Q1, I'm gonna probably be behind the eight ball for the year, um, because of what you mentioned around seasonality. So [00:11:00] I think that's the other huge thing of having an expert. Um, in your corner is to understand those seasonalities and where it's like, look, you were 17% profit, but that's not like you needed to be at 26% for this quarter.

'cause this is your, your haymaker here. Um, so I'm glad you brought that up.

Tim Hawkins: Yeah. And your, and your, your business has been telling you that for years, right? So. Um, as, as we use our data points to inform the future mm-hmm. Very specifically to your clinic, geographic region makes a huge impact on this type of thing, and the seasonality piece as well as you mentioned, which is great.

Um, but if I look at what your first quarter in the last three years look like compared to your, your following three quarters of a calendar year. We can, we can make really good projections about that now. And you're right. It, I mean, that could mean you need to make some, some belt tightening on the cost side to make sure we stay safe for the next three quarters.

Better to make that decision in April [00:12:00] than October when you realize that, you know, we're not quite there. The, the ability to have impact on these decisions is so much less the longer you wait. So. Yeah, every quarter matters. Yep.

Dr. Kevin Christie: It, it does. And like a couple things that we did, um, is we, we hit, we hit our parameter.

So I was really happy about that in Q1. But one of the things we learned last year from a, a guest presenter, which was really good, was that we're just slower in the summer. But I kept on, I always waited until the summer to, to start, I. Increasing marketing, um, because I had time, uh, to, to do that. But we realized we needed to hit that more like in April, like right now is to start to look at ways to increase our, uh, marketing presence in the summer.

It's gonna be slower just the way it is, but can we make it better than previous summers? And, and, and that's one of the things we will do is, uh, so I'll. I'll compare quarter over quarter, which is obviously, um, that's what everybody should do. Uh, you, you want to see your trend lines as well, but I, I'm gonna look at my Q3.

So Q3 is our [00:13:00] worst quarter. Uh, 'cause that's gonna hit, um, basically, you know, September, August and July, which is just not, not our bread and butter here. And I'll look at the previous summer and, and then I was like, okay, what if we doubled up our marketing here? What if I took a little bit of the money that was extra from Q1?

And use it into marketing. And so I'm not impacting cash flow on marketing things in the summer. Uh, I'm using reserve money from when it was nice. Right. And so this is some of the things that we've gotten better at over the years is because one of the things I would do a few years ago, or last year even maybe, was like, well, I gotta cut back on the, on the marketing a little bit in the summer, the marketing spend, because our, uh, cash flow's gonna be a little bit tighter, tighter in the summer.

But what I should have been just doing is taking five or $10,000 from the wintertime and putting into a marketing sinking fund there, or whatever you wanna call it, and then utilize that money, but it doesn't impact your summer cash flow.

Tim Hawkins: Absolutely. And you know what else it does? Is it, it increase those kind of actions?[00:14:00]

Those kind of insights and then executing on them increases the value of your clinic compared to other clinics in the, even your immediate area. Um, you know, people are coming in there and you're, you're looking to exit the business. Mm-hmm. You have more value because you're showing much better performance during, say, the slow summer months because the actions you're taking now, which can really pay off at the end as well.

Dr. Kevin Christie: Love it. Love it. So I want to, I wanna segue a little bit, but I'll, I'll prep us for it. And, um, we kind of, you know, there's parameters of having a healthy, uh, one practice location and, and really feeling like, you know what, we're, we're doing pretty good. Um, and I know that it's always, it's always harder with small businesses because a small business could.

Essentially, um, overspending their personal life and drain their business accounts. And so theoretically the business would be healthy if they weren't draining it from their personal life. Um, but let's say that's not the case. Uh, what, what are some of the things you look for in like a healthy one?

Practice setup? Some of the key performance indicators. It doesn't have [00:15:00] to necessarily be exact numbers, but just what are the things you're looking at?

Tim Hawkins: Yeah, absolutely. So, um, and, and, and this is the core tenant. If, if anyone comes to me and says, I'm, I'm looking at. Expanding. I want to open a clinic, or I wanna purchase or acquire a, an existing clinic.

Mm-hmm. Um, you know, there's some very specific questions I ask first before we even get to talking about that, you know? Yeah. First of all, what's the motivation and what, why are you doing this? A lot of times the motivation's wrong, and then where I get indications on that is by looking at the current operation.

And you have to really know your current operation and see where it's operating at full strength, where you might have some soft spots, things that you need to improve on, be it, you know, marketing or, uh, recruiting staff retention, you know, down the road, down the line. Um, yeah. And you need to know those things.

You need to know your KPIs. I I need to be able to wake you up in the middle of the night and ask [00:16:00] you. What your goal, you know, provider capacity utilization is, and you just mm-hmm. Blurt it out and fall back asleep. Okay. You need, you need to build that out so that you're operating as best as possible so that you're moving in a position of strength into this new expansion.

So, um, I wanna see cashflow healthy, not just for the last year. I, I like to see that consistent over a couple years. How you flow through slow points like the summer you mentioned. Um, I wanna see how your staff retention is. Are, are your providers happy and, and your admin staff happy and they stay for a while if you've introduced any new services products?

Have they had enough time to settle down so that we can really see the profitability of them and the, and the value they're adding to the practice? Um, and then what kind of war chest you built up to actually fund and finance and expansion.

Dr. Kevin Christie: Mm-hmm.

Tim Hawkins: Things like that. I'll, I'll add one more, which I think is, is huge around two every [00:17:00] day is technology and, um, you know, we, we have some softwares I that, that everyone uses, some, some key ones in the, uh, in the industry.

And I think a lot of the focus happens on the front end and, and the patient engagement, um, and all that type of stuff that rolls into the billing. But the back end of that software also, there's a lot of data in there that should be informing. More macro things about how the business runs, you know, uh, average patient value or patient lifetime value.

Um, revenue per patient, revenue per visit collections. Um, a lot of times we bill really well, we don't collect nearly as well, those kind of things. So really under seeing how the team. Understands that software.

Dr. Kevin Christie: Mm-hmm.

Tim Hawkins: All these things gimme a comfort level to start talking about, Hey, let's expand, let's open a new clinic.

Let's go make an acquisition.

Dr. Kevin Christie: Yeah. I, I, I like that. And there's a lot of things that we could, um, [00:18:00] kind of chat about from there. And one of the things I wanted to, I. Kind of touch on, 'cause it's tricky. You mentioned collections and you know, you, you could have, um, you know, two clinics and, and one could have a 30% profit margin, right?

I'll say, oh, that's really good and, and everything. And you have another clinic that's got, uh, 15 or let, is call it this, go even lower. It's go like 10% profit margin and you're like, oh, okay, that's, that clinic's probably not as healthy, but. Like if, if clinic a 'cause what I see a lot with chiropractors is they, um, their revenue is so low, right?

Like their, their 200,000 a year revenue, they keep their overhead very low. And so their profit margin is, is pretty good. But what they're absolutely paying themselves and what they're absolutely. Collecting and hoarding away is not a lot. Whereas a other clinic that's at 10%, maybe they're a million dollar or they're a $1.5 million or a $2 million clinic, and so the absolute amount of money that person's able to pay [00:19:00] themselves and support their family.

The absolute amount of money that's coming into the. Business that can be utilized for reinvestment is, is a lot more substantial and can do that. And so I just see a lot of chiropractors, they, they make the mistake. It's almost like they have a badge of honor that their overhead is really low. And I get that.

You don't want to be overhead, you don't want your overhead outpace you and all that. But there is the concept of like, you have to invest and spend money to make money, right. And right. I think that's a key thing that you, someone with your skillset is allow, is able to talk to 'em about, um, do you, do you try to have that conversation with 'em?

Like, look, you, you do have to spend some more money. Or if you got, if you went from this, uh, 900 square foot office to 2000 square foot, you'd be able to double your, um, uh, revenue each week or, you know, have another provider or two and things of that nature. Is that some of the stuff that you look at as well?

Tim Hawkins: Absolutely. I, I think the way I would approach it, so the simple way to approach it for me is to, to set a mindset, [00:20:00] um, about what the expectations are on the, on the business, and

Dr. Kevin Christie: mm-hmm.

Tim Hawkins: I'll break it down into a few pieces. So when you look at a pro profit and loss, you got your top line revenue, your gross revenue, you got your cost of providing the services as in the center, and then you have your support costs underneath.

The final piece at the bottom is, um. Net income, E, we we're gonna say EBITDA because mm-hmm. I like to focus on ebitda. Yep. Which is earnings before interest, taxes, depreciation, amortization, just for the proper noun there. So I look at those four pieces and what, where I start with somebody is I say, okay, for every dollar of that top line revenue.

Mm-hmm. Let's just start with the idea of 50 cents. Of cost is going in to provide that service. So I have a dollar, I use 50 cents for for providing the service. Mm-hmm. And then my goal is to use 30 cents to support the providing of that service. Mm-hmm. And then 20 cents on ebitda, which is basically the profit take home.

And you know, those fluctuate. [00:21:00] I wouldn't necessarily say that's every clinic, I think. Mm-hmm. Probably get down a little bit more, like 25% on that support services and 25% then on ebitda. And, and then we start tweaking those bells, right? But, um, and then if and why, and so why I'm answering your question that way is mm-hmm.

Once I set that parameter, I come in and say, you're, you're spinning 10 cents on support cost for the revenue you have at the top. Instead of 20 cents or 25 cents or 30 cents, what are we missing? And, and what is causing us to squeeze our business that tightly to not, um, spend what would be a traditional breakdown of a business's p and l.

And by coming in from that angle, I'll start to see little hints. A lot of times it's around collections. A lot of times it's billing efficiency, things that are happening. Um, you know, client feedback marketing is a huge one, right? Yes. So people aren't spending [00:22:00] on marketing because. They're afraid that that next dollar won't come in, and then there'll be the, the, those little breakdowns will, will fall.

But if you're not spending that little, that piece of the dollar on that support, it will affect your top line revenue. It will affect your profit.

Dr. Kevin Christie: Absolutely. And it's, we have a big issue in our pra in our, uh, profession, where a lot of people are very weary of spending money on marketing. And it's really hard to scale when you don't do that.

Right? Like, it, you, you know, there's a lot of people, again, will, will, will have a, you know, hang their hat on the fact that they built a referral-based practice and they don't do any marketing. And it's fine if you just want to be one provider, um, and do all that. But typically to add a doctors or to really grow revenue with profits, and, and again, if you want to.

Have a second location or more, you're going to have to have a marketing spend that is, is obviously strategic and, and has a return on it. And, uh, chiropractors have to get outta that mindset of just not spending money on marketing. [00:23:00]

Tim Hawkins: It's, it's a, you know, diversification is huge in, in lowering your risks.

Right? And you have risk all across being a business owner and, uh, marketing is really about creating brand. Mm-hmm. One of the things you can do with that marketing is, you know, building different patient channels. Say you are heavy on the referral marketing market part. Mm-hmm. Right. Or, and you do a lot with insurance or Medicare or, you know, personal injury stuff.

Um, building out those others, starting to invest now mm-hmm. Could be one thing that really keeps you afloat and ahead of the game when there's a downturn for some reason or a change, you know, five years from now. So I, I completely agree. And, and building that brand takes time. It's consistent marketing over years.

And that, that adds a huge value to your, to your business when you do wanna exit. Well,

Dr. Kevin Christie: it, and it does. And I think the other misconception, and I won't spend too much more time on the marketing, but is that, uh, it's just ad spend only. [00:24:00] And they're thinking of that, uh, that's obviously part of it, but it could be things, you know, like if you wanted to get more personal injury patients.

If you spent 500 to a thousand a month on, um, lunches with attorneys and dinners, you would probably generate more business. If, uh, you wanted more MD referrals and you, if you spent 500 to a thousand a month or even more on md uh, meetings and lunches and things like that, you would probably get more MD referrals, and that would have a much better return on investment because if you know what your new patient is worth, let's say it's worth $1,500 on average, and you spent 500 a month on md.

Lunches and you start getting a few MD referrals a month. I mean, that's a direct ROI and that's how you would scale your marketing to, to grow. And so, um, highly, highly recommend that. Um, the other thing I, I want to just bring up real quick, and one of the things we did is, is, um, we recently, a year ago invested in, in technology.

We did shockwave and you know, those aren't cheap. Um, but we're, we're gonna generate. Probably close to a hundred thousand this year. [00:25:00] Uh, we're on pace for that in new revenue. And it wasn't that, it just took it, I mean, maybe some patients would've gotten our regular care and not shockly, but a lot of 'em iss just new money and for a pretty reasonable investment in doing that.

And we're getting better outcomes with certain conditions. So it helps drive referrals. Uh, do you also help chiropractors with knowing when to get equipment? Does it make sense to buy it outright? Does it make sense to finance it? Uh, things like that.

Tim Hawkins: Absolutely, because that's all part of the decision, make, uh, process around the numbers.

And so that immediately to have that conversation be informed, we need to be confident in what. Mm-hmm. The last few months have told us what our balance sheet really looks like. All lot of times it's about cash. Or how easily we could finance equipment like that. So, um, that's, that's a key component of, you know, any kind of expansion, be it equipment services or a new clinic expansion, you know, in other locations they're all very similar and [00:26:00] they're all finance based.

Dr. Kevin Christie: Do you also in a, in a. Smaller, uh, business type of setting, like most chiropractic offices are. Do you also work with the doctor on also kind of tying in their personal findings and making sure they're not bleeding the business from that side of things? Do you, do you have those discussions?

Tim Hawkins: Yeah. You know, more and more every day I've, I've, we're almost starting to market ourselves as holistic.

Yeah. Um. Uh, advisors because there's so much that happens on the personal side, and there's so much need over there that the current structure of the business is never gonna support that. Eventually you're gonna squeeze one to bankruptcy, right? Yeah. Either the business or you, or both. So it has to be part of the conversation, and I think it also has to be part of the conversation as to where you are mentally, right?

It's not just how you're spending money. Sometimes that's a symptom of. Where you're on your personal life art, if you're, if you're needing to double down on retirement savings for [00:27:00] some reason, or mm-hmm. You know, you have young kids at home, or you're putting kids through college, those are all questions that need to be part of the discussion before you do any kind of big investment and expansion or something like that.

Dr. Kevin Christie: Yeah, because it's, you know, uh, I'm, I'm, I'm in my mid forties and it's one of those things like if I were to, um, decide to open up a second location, I would have to have that conversation with my wife and say, you know, look, um, uh, we're gonna have to maybe not. To utilize money in our personal life for this, and let's go a little lean this year on the personal side, uh, and let's reinvest money into the business side for some delayed gratification and then ultimate growth because, yeah, I mean, as a small business owner, if you, like you mentioned award chest, if you developed award chest of a hundred thousand dollars.

Uh, you could easily take that money and get a whole new, like, uh, roof for your house, right? Or upgrade, upgrade the kitchen. I mean, it's your money. You don't have a, a board to answer to or stockholders. Like, you could [00:28:00] take that money and buy a second, put a down payment on a second home and, uh, the Carolinas, right?

And so you gotta get clear on what your family goals are, uh, what on what you're gonna use that war chest for. And you obviously, you would probably want to do that prior to accumulating the money. Um, but, uh, I, I, I'm glad to hear that, that some of the conversations we're having people 'cause this, it seems like it's such a massive component of this whole thing.

Tim Hawkins: It is. And, and that war chest, that, that the term I use, which I love, I, I think a lot of times that is on the personal side, so immediately have to swing back there and say, okay, you've been able to take this much money out of the business. Is it going somewhere where it's sitting or has it all been spent because that's, mm-hmm.

A big part of the protection on the downside risk of, you know, opening a new location. Um, and you know, a key part of that too, I'll say, and this is where a personal financial planner working with a business CFO or in a communication, you know, between folks like that is the opportunity cost. Because one of the things I was gonna look at is I can certainly help walk [00:29:00] through all this strategy to expand the business, but you, you gotta ask yourself, is that the best use of.

My, my reserve funds, is that the best opportunity for me to make money? You know, based on the conversation, we may say, you know what? Stock market's actually gonna be better than this, so why take this risk? And, and those, you have to have those clear-eyed conversations before you dive into something like this.

Versus just push button saying, I'm doing well, let's, let's open another one and do, well double.

Dr. Kevin Christie: Yeah, and it's a, it's a good point. And you mentioned it like you, one of the first questions you asked 'em is like what their vision is and what their reasoning for wanting to open up another location or more.

Uh, because again, yeah, it, it may not be the best use of your, of your investment to, to do that. You may be more wise to just expand and grow your one location, um, depending on what, again, what the goals are. Um, and so that's, uh, definitely fascinating. Or like you said, just investing, you know, maybe buying that, uh.

Second home that's gonna appreciate and you're gonna enjoy it on [00:30:00] weekends with family. Uh, maybe you're at that stage of your life where grandkids are coming and you want a place where the whole family goes to. Right. It just all goes into uh Right one, one's vision. Um, that's cool. And then, uh, just I guess the other last kind of question I have, and we can chat about this a few minutes.

Do you also start to try, do you do anything? Let me re kind of rephrase the question. To try to get a beat on or gauge a person's risk tolerance in this. And it's like, look, you've got this money here, but let's keep that on tap for emergency, and then let's maybe see if we can get a bank loan to do a second location.

Uh, or you know, just what are some of your thoughts around the risk tolerance of it? Because obviously everybody's different and some people can be, uh, Elon Musk and some people, uh, cannot. Uh, yeah. And we don't have to be that to, to obviously open up a second location. But what, what are some of the things you do to try to gauge that?

Tim Hawkins: So, uh, that's a great question and that is absolutely underpinning the vision, motivation why questions that I asked in the front end because, um, if, if I haven't been [00:31:00] working with you to date, I really don't know how you're coming into this and mm-hmm. There are so many facets to the risk part, um, how you get the money.

So you don't necessarily need a war chest sitting in your personal bank account. Mm-hmm. I mean, you can get a loan from a bank, you can get financing from whoever. The acquiree is a lot of times is cell phone business. There's a lot of these options on ways to get money to, to finance an expansion. But y if I don't real, I need to understand on the front end if you're gonna be losing sleep for the next four years because you have banked it, like there are people who just can't deal with the concept of having bank debt, knowing other people money.

Um, I would never, I, if, if I don't know that ahead time, that's gonna be a headache and a torture for both of us over the next few years. Yeah. Um, and so yeah, understanding that risk tolerance is huge and I, I, and that's imputed in all of my conversations with clients. I, I will guide them to specific [00:32:00] tax providers based on their risk tolerance.

Your risk tolerance should match the risk tolerance of, of the person giving you tax advice. Otherwise, there's gonna be. Sleepless nights, there's gonna be anxiety involved in that. And as if you're gonna expand to another clinic, you know, we talk about risk and, and that kind of thing. And your tolerance for it.

Your role's gotta change. I mean, you're maturing into a CEO from a, from a practitioner a lot of times, and that's a huge change. It's, it's really a different dynamic. And what happens a lot of times if you don't approach that clear-eyed you, your, your risk tolerance is. Or, or your, you know, the, the ability for you to handle the risk.

If, if revenues are a little bit low, suddenly you end up at the new location, you know, seeing patients when really what we need is you to be doubly focused on the overall macros about how we're getting this up to speed and, and how, you know, just, and also not putting the old practice or the old location on cruise [00:33:00] control.

All this all buys into your ability to how you react to risk. Mm-hmm. Which is one of the reasons I love to work with. Um, business owners for a little bit before they make a big decision like this, because that's all kind of then inherent in our conversations.

Dr. Kevin Christie: Yeah, you know, it's, uh, I've seen situations, I'm sure you have too, where they open up that second location and then the first location starts to suffer 'cause their bandwidth is spread thin.

And that's that opportunity cost that's there. Um, and that happens. And yeah, I think everybody's, uh, relationship to risk is, is a reality that you have to take on. Um, I. I think I do see a lot of people, and maybe you're seeing it as well, obviously private equity is getting into the chiropractic space and, um, they, they tend to like multi-unit businesses.

Uh, I don't know if there's a magic number, but I've heard like having 10, uh, locations would be really good to have a private of equity equity person come in and, and, and swoop them all up and have your big payday. Uh, is that some of the stuff that you see certain chiropractors working [00:34:00] towards?

Tim Hawkins: Yeah, I don't, I don't think you need to be quite as big as 10 to be seeing that.

Once you're, once you're above three or four, I think you start to see those conversations start. And, you know, when, when we get into that conversation of, of a bigger business and, and more locations, um, you, your, one of the key factors to always talk about is that your buyers are changing.

Dr. Kevin Christie: Mm-hmm.

Tim Hawkins: Your acquisition pool, your eventual exit.

Now you are dealing in the private equity world, venture capital world a lot more clearly. Mm-hmm. And, and the pool is much smaller, right? Mm-hmm. And those guys are much more influenced by the macroeconomics of, of, you know, where we are, you know, economics countrywide internationally. So, you know, you could suddenly, when your exit exit point hits, that could dry up and you're not gonna get a single clinic oftentimes buying a a five clinic.

Practice, especially not at the premium, right? So, mm-hmm. So, you know, that goes back to, so we do see that, to answer your [00:35:00] question, and I think that goes back also to the transformation of the chiropractor, business owner to, to have those conversations. Um, you're, you're, you're building yourself as a CEO.

You're developing yourself as a CEO and not a technical practitioner anymore. It takes a little time. And you need advisors alongside. You need good legal advice. You need good finance advice too. You need those wing people to help help you make those decisions, but it's

Dr. Kevin Christie: a key

Tim Hawkins: point.

Dr. Kevin Christie: It's been great, Tim, I I'm gonna, uh, leave everybody with one little thing.

You know, I, it's okay to be good at business and be a doctor. I think there's a misconception that, um, they, a lot of chiropractors just want to be doctors only, and if they try to dive into learning about business, uh, then it's gonna take away from them as a doctor. And it's just not the case. Your, your career is gonna evolve.

Uh, I think being good at business means providing the best patient experience, hiring grade, developing a team culture, understanding marketing, understanding growth. Um, because if you don't have that growth, it's gonna be [00:36:00] hard to have, um, a thriving practice that you feel great about. I. And, and it ultimately are the best version of yourself as a, as a chiropractor.

Uh, and so I think stuff like this is where you need to start learning it. And, uh, as strategic coach would say the concept of who, not how, which means find a who to do it for you and not how to do it yourself is also important. And, and on that note, um, if someone wants to reach out to you, uh, how can they find you?

Tim Hawkins: Yeah, absolutely. Um. It's probably best to my direct contact t Hawkins, HA wk i s@lbd.com. Is is a good way to reach me and, and just gimme a call 5 7 1 2 6 3 13 44. Uh, we're revamping the website so probably can find it there as well. www.ltd.com Larry time boy dog.

Dr. Kevin Christie: Perfect. We'll, uh, we'll put that in the show notes.

Well, thank you for this, uh, great, uh, wisdom in the chiropractic profession, and it should just be the kind of tip of the iceberg for our audience to [00:37:00] realize they need to understand this stuff.

Tim Hawkins: Thanks, Kevin. Glad to be here. I.