Paying yourself without starving the practice

Ask a group practice owner how much they should pay themselves and you'll usually get a flinch. Too little and you're working for free inside your own business. Too much and you drain the cash the practice needs to survive a slow month. Most owners swing between the two, month to month, on feel.

The fix starts with separating two things that get blended together.

The first is pay for your work. You see clients and you run the place. That's a job, and it should be paid like one. If you stopped tomorrow, you'd have to pay someone to replace you. That number is your wages, and it's a cost of the business like any other.

The second is profit. That's what's left after everyone, including you-as-an-employee, is paid and the bills are covered. Profit belongs to you as the owner. But it doesn't all have to come out the moment it shows up, and this is the piece owners get wrong: they pull profit out as fast as it lands, then scramble when payroll hits during a slow stretch.

A simple policy beats monthly guessing. Decide on a cash reserve first: a cushion that covers a few months of expenses if revenue dips. Build to it before you take real profit out. Once you're there, take profit on a set schedule, leave the reserve intact, and stop deciding it from scratch every payroll.

Here's the version we ran in our own practice. To start, every dollar of profit went straight into a reserve account, nothing drawn, until it covered two months of expenses. After that the split changed: half kept building the reserve toward a three-month target, a quarter went to a strategic-investment account for the things we wanted to fund on purpose, and the last quarter became owner draw. None of it was sophisticated. The money just had somewhere to go before it arrived.

What we didn't expect was how quickly it paid off in a way that had nothing to do with the balance. Within a month or two we could watch the safety net grow, but the bigger thing was the calm of it: we had a plan and a number to track against, and the monthly guessing just stopped.

The numbers will be specific to your practice. The structure doesn't have to be. Pay yourself a real wage for the work, build a buffer, then distribute profit on purpose instead of by reflex. Not having to relitigate it every payroll is worth nearly as much as the money.

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