Profit Isn't What's Left Over: Set Your Target First

Here's how most private-pay practice owners plan their profit.

They subtract their expenses from their revenue. Whatever's left, that's what they made.

That's not a profit strategy. That's just math.

A real profit target works differently. You decide on the number first. Then you build everything else around it: pricing, payroll, expenses.

Most healthy private-pay practices run at 20 to 30% net margin. If your practice is below 15%, that's not a slow month. That's a structural issue.

But here's what most owners miss: once you set a target margin, every other decision gets easier. You know exactly how much payroll you can carry as a percentage of revenue. You know how much overhead is affordable. You know when a hire makes sense and when it doesn't.

Setting profit first changes the math from "let's hope something's left" to "we designed this to keep $X."

A bookkeeper tells you what happened. A CFO asks what you want to happen and builds backward from there.

That's what October is for.

Your net margin target for 2027 is not a number your accountant hands you. It's a decision you make. Make it before you make any other plan.

Because the moment profit is accidental, everything else is too.

Your move this week: Pick a net margin target for 2027. Write the percentage down before you look at what it was this year. Healthy range for a private-pay practice: 20 to 30%.

Stay Profitable, Dan

Want help with your own numbers? Schedule a free numbers review. One call, two or three of your real numbers, and a clear next step.

This post first appeared in The Profit Weekly, Dan's Friday email for private-pay and hybrid practice owners. Get The Profit Weekly every Friday.