Purposeful . Profitable
Frugal vs. Cheap Practice Owners: What's the Difference? 
Sabrina Pelech
Chief Profiteer
9 MIN READ
When a practice owner starts to examine their operating expenses, it is not uncommon to start thinking you are spending too much and that the only solution is to hack away at expenses and close the purse strings as tightly as possible.
The last thing you want to do is become a cheap practice owner where you start compromising practice effectiveness and efficiency in the name of saving a buck. While you may save money here and there you really don’t know how much are you losing in lost revenue and productivity from buying a cheaper subpar solution?
That does not mean you cannot be a frugal practice owner, where you evaluate what expenses can be cut while maintaining efficiency and productivity and make decisions based on how essential it is to your practice rather than on price.
Here’s a few ways to help you determine if you are a Frugal or Cheap Practice Owner.

“A financially healthy practice is a result of an economical practice owner spending money wisely on products and services that help achieve their goals vs a cheap practice owner that makes decisions solely on price.”

1. Cost vs Value

This is the first sign of being cheap vs frugal, if you are not willing to entertain a possible solution simply because of its price you are most likely acting cheaply than frugally.

A frugal practice owner will evaluate the problem they are trying to solve, determine what features will help solve that problem and then review their financial plan to determine how much of their operating expense they can allocate to this purchase.
Then a frugal practice owner will determine a budget range the low range would be the most likely outcome or what they consider to be a reasonable market price. As well as a max budget amount that they can spend up to but not over.

A fugal practice owner will then evaluate all possible solutions within their price range to determine which ones check off the most problem-solving features and will make a best fit decision rather than a price decision.

Its unfortunately but many cheap practice owners will miss out on great opportunities just because they were not open to spending even just a few dollars more on the right solution.

2. Not Considering Others

There are many ways to cut expenses and save money some are better than others. But most practice owners agree that cutting expenses at the expense of staff can be detrimental to productivity and moral.

 
Let’s say you are looking for a new management software for your practice and you are evaluating 2 options, one is easy to use and streamlined and the other is a cheaper option that is harder to use.

A cheap practice owner may decide to purchase the cheaper solution even though its harder for the staff to accomplish their job. Negatively effecting productivity.
While a frugal practice owner will choose the streamlined option in favor of a productive staff.

Another example would be if you own or rent an office space and are responsible for paying utilizes such as air conditioning and heating.

A cheap practice owner may set office temperatures to an uncomfortable level simply to save money. Even though this may negatively affect the moral of your staff.

Frugal practice owners may make minor adjustments to the thermostats while keeping the room temperature comfortable in favor of team moral.

3. Falling Victim to Freebies

Cheap practice owners don’t want to spend money regardless of the potential impacts. As a result, they are constantly on the hunt for free items and unbelievable deals.

A cheap practice owner may choose to piece mail a solution together using 3 or 4 different free software versions rather than paying a sum on money each month for a single all in one solution that can drive staff productivity.

While frugal practice owners like to find good deals and free items, I mean who doesn’t, they’ll invest their money in a solution that makes their practicees run most effectively.

4. Short and Long-Term Thinking

Cheap practice owners tend to only think about short term wins such as saving money now rather than the potential long-term gain.

A frugal practice owner will consider the long-term ROI of an expense and will spend more now to increase productivity and revenue in order to achieve the long-term gain.

Such a decision could mean they are missing out on great opportunities.

5. Spending Priorities

Frugal practice owners operate using a budget and prioritize their spending. This means that they will opt to spend more money on the essentials and skimp on things that don’t are not as important while cutting outdated expenditures.
  
Cheap practice owners don’t have spending priorities. Their goal is to get everything at the cheapest price as possible. Even if it means they must sacrifice quality to do so.
 
You shouldn’t be so fixated on costs that it adversely impacts your practice. For that reason, it’s important for you to be aware of the difference between being cheap and frugal.

That’s where profit first can really help your practice thrive by helping you determine a healthy Operating Expense budget while not compromising your profit account or owner’s compensation.

Why use The Roadmap to Financial Growth?

The Roadmap to Financial Growth is a great start to implement Profit First in your business. This Assessment calculates your business’s Target Allocation Percentages for you in order to give you a unique implementation road map. As a result, you know exactly how much money to allocate to each of your accounts every month. Together with the detailed startup guide, creating your accounts and setting up a rhythm in your business has never been easier.

The included Progress assessment, taken every 12 weeks, lets you track your advancement toward reaching your profit goals. While creating a Progress roadmap designed to get you back on track toward your Target Allocation Percentages. 

One of the great things about the Profit First Chiro Roadmap to Financial Growth is it can be used for both projected and actual revenue. So, not only can you determine the best course of action right now, but you can draft plans and prepare for future outcomes.

All you need to get started is your balance sheet or profit and loss statement for your last 12 months. You can easily get this from your accounting software or with a quick call to your account. 

If you don’t have this information handy you can still get close, but you will be making a projection instead of an actual plan, so it is worth taking the time to get your actual numbers.

So, what are you waiting for!

Learn more about The Roadmap to Financial Growth now and find out what small steps you can take to achieve profitability today!

The Roadmap to Financial Growth

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