Today, I focus on opening your thinking on ways of increasing your income and wealth, perhaps dramatically so. The main idea is that no one should – or needs to – be paid only in one form. Let’s go!

Payment #1: Get Paid to Do Your Job

This is your payment for doing the work you do. For most readers this means getting paid primarily to do the clinical work of seeing patients. You may be paid an annual salary or as a percentage of collections. The way your earnings are calculated is not relevant to my point today. Payment #1 is for anyone in any job and profession who gets paid to do a job. This is the foundational form of payment for nearly all working adults.

Payment #2: Get ‘Paid’ to Develop X-ray Vision

Another form of “payment” that is equally available to anyone with a job is to regard what you learn as an additional form of payment. This way of viewing gaining knowledge and skills may seem silly to you. After all, you may or may not get paid more money from gaining these additional skills. If you get a salary increase or increase your billables, then indeed this form of “payment” translates into actual income increases. My point is that even if it doesn’t, it still makes sense to regard new learning as a form of payment.

This way of viewing learning as “payment” even if it does not immediately translate into higher income is to recognize that one of the most valuable types of learning is the ability to perceive opportunities.

Consider this example: you’re hired as a clinician to work in a group practice. Despite your initially high hopes and positive attitude, you realize this group practice is poorly run. You notice you’re becoming increasingly frustrated and burned out. You notice that other clinicians are showing the same signs, and patients and clinic staff are also stressed and unhappy. You may close down and choose to leave this toxic workplace ASAP. But even if you plan on leaving, you can still start thinking about what makes this group practice so dysfunctional. Perhaps you take a deep breath and consider also what works well here.

You can approach your remaining time at this group practice with curiosity, determined to learn specifics on what makes a clinic run well or badly. Soon, your thoughts may run in the direction of, “Well, if I ran this place, then this is what I would do …!”

And there you have it. You are now developing an approach to perceiving the functions of an enterprise, the good and the bad of it and perceiving the opportunities to do it better. It’s as if you are developing X-ray vision for opportunities. You start seeing a practice or any business as a virtual machine, one that serves its customers well or not and that generates a profit or not.

This X-ray vision may be something you never convert into money. OR it may be what makes you a multi-millionaire. I recommend you both develop this X-ray vision for opportunities and then monetize it.

How could you monetize your ability to identify and characterize dysfunction and develop more functional processes? You can do so by starting your own group practice and run it right and end up winning in the marketplace. You may become the employer of choice for clinicians and staff, and the clinic of choice for patients.

You can also (or instead) become a consultant for other poorly run clinics and increase both the wellbeing of everyone involved there and increase the profitability of that enterprise.

BTW, I want to point out that any person, in any profession can develop this X-ray vision for opportunities and processes for running an enterprise well. For example, you can be a warehouse worker and notice that your warehouse is poorly deploying its workers, that there are a lot of inefficiencies and perhaps risks of injury. Maybe you have an idea for how docking bays could be better designed or how a dolly can be improved to move inventory around more safely and efficiently. Maybe you even patent a new device or a business process.

Payment #3: Get Paid in Profit

When you are a solo practitioner, on the one hand, you own your own business, and you probably bill and file taxes under your business entity. On the other hand, you don’t have a business because, first, if you’re not working, no money is being generated, and, second and relatedly, no profit is being generated. Note that profit is not the money a practice/business generates for the clinicians and other workers to get paid for the work they do. Profit is the money in excess of everyone’s compensation for doing their work and of the expenses generated from running the practice/business.

To build a profit-generating machine means building a business that produces 1) the product or service it exists to produce and 2) profit, that is, money in excess of all costs. Profit = revenue minus all expenses.

Let’s say that using your X-ray vision for perceiving opportunities, you start your own practice and hire a group of clinicians to work in your practice. Let’s say in the first year the following are the sources of money you make from the practice. (These numbers just to illustrate the concepts.)

  1. $200K – payment for your direct patient care. Since the practice is small, you continue to see patients part-time.
  2. $100K – payment for administering the practice. You spend some of your time running the practice.
  3. $100K – payment that equals the practice’s profit. This is what you make after all compensation and other expenses are paid.

You are thrilled. You made $400K! But now, this is where things get VERY INTERESTING. Read on.

Payment #4: Get Paid to Build a Profit Machine

Let’s pick up the story where you left off. You’re thrilled to have made $400K in one year. What’s the next step? Here are two options:

  1. Keep doing what you did last year. Maybe the practice grows; maybe it doesn’t. After all, you’re happy making $400K annually and let’s say that’s what you now keep doing and keep making every year.
  2. You make the following change: you fire yourself as the practice administrator and hire someone else to do that job for you. You pay this administrator $100K to do that job. Everything else being equal, you are now working less but only making $300K a year. But you have a plan: you spend that freed up time growing the practice. At the end of the year, the practice revenue has grown, and the profit is now $200K for the year instead of the $100K of last year. So, you gave up the $100K you were saving by administering the practice yourself and are paying someone else to do it. But you made up for it by increasing the practice’s profit by $100K. So, you’re still making $400K for the year: $200K from direct patient care and $200K in profit.

Voila! In both scenarios you made $400K for the year. Is one better than the other?

You betcha! This is where the concept of profitability comes in. In both scenarios you made the same amount of money. The HUGE difference is that in the first scenario you are the proud owner of a $100K profit-generating business and in the second scenario the owner of a $200K profit-generating business.

Guess what? When it’s time to sell, the second one will bring in twice as much as the first one. In fact, the second, larger and more profitable, business will likely bring in MORE THAN twice as much. Why? Because businesses with larger revenues and profit are worth more per dollar of profit than are smaller ones. This is because they are regarded as being more stable, especially in the long term. Also, larger businesses that run well do so because they have the procedures, policies, and staff training that allows them to be run well and not have to depend on one dedicated company founder.

Payment #5: Liquidity Event

When you build any type of business that produces profit, that business now has a value inherent to it. That business now generates profit and eventually a buyer may pay to purchase it, in effect, converting their current money into ongoing cash flow (from profit).

“Liquidity event” is investment banker speak for owners selling businesses and converting their illiquid asset (their company) into a liquid asset (cash).

So, following from the previous section, let’s say the practice founder decided on spending newly freed up time growing the practice. Even though he or she made the same amount of money in both scenarios, the second scenario led to the practice now achieving a valuation of double the first scenario.

Let’s say a buyer offers the owner an amount equal to five times the practice’s annual profit. In the first scenario, the owner walks away with half a million dollars, whereas in the second, with one million dollars, if not more.

To summarize, someone can get paid to do the work their job requires, to develop methods for seeing and acting on opportunities, to build a profit-generating machine, to earn additional money from that profit, and to grow the value of the profit-generating machine by growing its profit.

So, profit pays in three ways:

  1. You keep the amount of profit generated that year.
  2. That amount of profit is usually repeated in each subsequent year without doing anything new but just maintaining the profit machine.
  3. You cash out by selling the machine that not only generates profit in the present but will likely do so for years to come. That’s what makes the business a machine.

Thanks, and let me know what you think. If you have questions about this or about starting a business, I’m happy to share general success concepts.

Dr. Jack

Language Brief

“Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” ― Albert Schweitzer

“Business opportunities are like buses, there’s always another one coming.” ― Richard Branson

“Don’t spend time beating on a wall, hoping to transform it into a door.” ― Coco Chanel

“There is no elevator to success. You have to take the stairs.” ― Zig Ziglar

“Keep away from people who belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” ― Mark Twain