There is an interesting phenomenon when it comes to starting your own business and the upward trajectory of growth it tends to have. I have literally talked with hundreds of business owners ranging from nurse practitioner practice owners to people who own landscaping companies and there seems to be a predictable growth pattern in a business if the business owner continues to invest money back into it. This is what I want to discuss in today’s article as it will help many nurse practitioner practice owners and those aspiring practice owners on what they can expect in terms of revenue generation in their business over a period of 5 years. Plus, it will help keep you motivated! Remember, motivation is your momentum!
Now, there is one caveat in this article for this principle of revenue growth to be true: you MUST be actively trying to grow the business. If you are just open one day a week and never aspire to be open more than that or you do not want to hire employees to help you, then this article will likely not apply to you. For a business to grow, you must reinvest profits back into it and always be thinking about “what’s next” in terms of its growth. If you are just starting and want to know what to expect in the first year, then THIS article is for you. So, with that out of the way, let’s talk about how much money you can expect to make year after year in your practice.
The compounding effect with revenue that occurs in a small business can be predictable. If money is reinvested back into the business, then you should easily see a 2-4x return on that money. What this means is that year after year, your businesses income should double or even triple AS LONG as you are delivering a valuable service, you make customer service a priority, you reinvest money back into the business’s growth, you are consistently marketing your practice, you develop systems, and you keep expenses as minimal as possible. These concepts are CRITICALLY important for the growth of a business and are beyond the scope of a single article (In fact, I am working on a course on how to SCALE/GROW a practice. Think of it as an advanced global business course that is applicable to any kind of practice, but that won’t be out until summer.).
One of my first business mentors told me: “A mentor told me this, it has been true for me, and now I want to tell you this so you can look forward to the future. Justin, you will see an interesting thing occur in terms of your businesses revenue year after year. Every year the revenue will increase 1.5-2x if you actively continue to work on the business. My landscaping business generated about $100k the first year, then $200k in year 2, $350k in year 3, $600k in year 4, and now I am in year 5 and we will break the $1 million dollar mark this year. I didn’t believe this when my mentor told me this is what I can expect, but it has come true.”
This was literally told to me just months after I started my first practice. I thought he was full of it to be honest with you, but I will be damned if he wasn’t telling the truth: I am seeing this with my own practices now! A year-by-year compounding effect of its revenue. I talked to that old mentor recently and his landscaping business is approaching $4 million in revenue this year. The man is a machine to say the least…
I am going to go over 2 personal examples now to show you just how important it is to reinvest your money back into your business for growth.
Year one: $170k
Year two: $340k
Year three: $700k
Year four: I should break $1 million if I can get one more NP to come aboard to help me grow
One thing I want to make clear here: I have reinvested HUNDREDS OF THOUSANDS of dollars back into this business. You MUST spend money to make money. There is no way around it. I continue to market the practice. I have hired multiple employees including other providers. I have WORKED ON the business more than I have worked IN the business. That is right, I work more ON the business than seeing patients! My men’s health practice is a partially passive income stream because I have hired others to work for me. I see patients 4-8 hours a week… That is it. I am very excited to see what year 5 and 6 brings for my men’s health practice!
Year one: $90,000
Year two $230,000
Year three: $180,000
Year four: $120,000
Year five: probably the same as year four.
Many of you are like “Hey wait a second, you said you should double your money every year!” and yes, that is true IF YOU REINVEST BACK INTO THE BUSINESS. I haven’t reinvested back into my medical cannabis clinic… why? Because it is a business that is difficult to grow. There are only so many patients wanting medical cannabis cards and it is 100% an active income source. I must see patients to make money unless I hired other providers to help me but there are not enough patients to go around for this. Additionally, most of these patients are a one time and done visit, there is little in terms of recurring business. This clinic is the true definition of a part-time practice. I want to keep it that way. So, you can see how not reinvesting back into the practice has caused it to STAGNATE. Therefore, the compounding effect does not apply.
I want to say that one more time though: NOT REINVESTING MONEY BACK INTO YOUR PRACTICE WILL CAUSE IT TO STAGNATE.
Flip the coin.
REINVESTING MONEY BACK INTO YOUR PRACTICE WILL MAKE IT GROW.
It is like fertilizing a plant… It will never grow if you don’t fertilize it. If you fertilize it though, it will grow. A business is no different.
For all of those who are just getting started with their practice or those who have already started and are seeing profits, remember the compounding effect to expect IF you reinvest money back into your business. As long as you are consistently investing back into your business, then expect a revenue growth of 1.5-2x yearly. If you are content where you are, then expect your business to produce a consistent income and keep the status quo.
I am content with my medical cannabis clinic; therefore, the revenue is flat and that is fine with me.
I am actively working on my men’s health practice; therefore, the revenue follows this compounding principle.
Now, once you hit the big bucks like $1 million + a year in revenue, there are a few different items a business owner must tackle to continue this compounding growth such as developing systems, outsourcing work, and automating as many processes as possible, but that is beyond the scope of this article.
But remember, expect 1.5-2x revenue growth year after year. Keep this in the back of your mind. It will help you get through the inevitable dark times in your entrepreneurial journey and help keep you motivated. The big money is out there, you just have to give it a little time!