My Grandfather shared with me once that back in the day (in the 1950s), he and his buddies would drive around town until the empty light on the car’s dashboard lit up. Once the light was on, they’d reset the car’s odometer and drive until the car would run out of gas.
The purpose of the exercise was to know with certainty how far their cars could take them once the gauge indicated empty.
As it turns out, gasoline stations were few and far between in rural Texas, so knowing you had enough gas to reach the next town was, in fact, a very good idea.
Let’s say your medical practice is a car, cash is gasoline and miles are weeks.
With that in mind, consider these questions:
- Does your car (practice) have a gasoline (cash) gauge that displays full – half – empty?
- If your car (practice) doesn’t have a gauge, how do you know when the gasoline (cash) falls below critical levels?
- With a full tank of gas (cash) how many miles (weeks) is your car (practice) able to cover?
- How much and how often do you need to fill your car’s (practice) gas tank (bank)?
- Do you know your car’s (practice) empty light threshold?
- When it lights up, because your car’s (practice) gasoline (cash) is reaching empty, would you know – like my grandfather and his buddies knew – how many miles (weeks) you could cover before running out of gas (cash)?
- Do you carry a portable gasoline tank (i.e. savings or line of credit) to use if there isn’t a gas station for miles (weeks)?
I think it is safe to assume that most everybody agrees, driving a car around without a gasoline gauge is foolish. Equally foolish would be to disregard the “empty” light on your car’s dashboard. And we can all agree it would be unwise to look for a gas station after your car runs out of gasoline instead of before.
Many however, manage their practices believing the practice will never run out of gasoline. Many, don’t even have gasoline gauges, which is bad enough, but even worse is disregarding the “empty” light all together when it lights up. Others have a huge hole in their gasoline tank and keep wondering where their gas is going?
In the How The Mighty Fall: And Why Some Companies Never Give In, Jim Collins talks about how companies start to fall apart way before they actually fall apart. Like a disease that starts to affect the body before symptoms are visible, many companies start the decline before the leadership is even able to make a diagnosis. And often times, by the time the leadership realizes there is a problem, it is often too late.
Don’t let your practice be one of the companies Collins is talking about and make sure your practice monitors cash-flow the way drivers manage their car’s fuel needs.
(By the way, in case you were wondering. My grandfather carried with him a portable gasoline tank during the “how far can the car go before it runs out of gasoline” experiment).