Counting frames!?!?!

[Carbon Pit]

OK I work for an MD practice that has two locations. Every once in a while I'll call the other optician to see how busy they have been. I say 'how much have you sold this month?' and she'll say something like 'yeah we sold 34 last month' my response 'you sold 34 grand!?!?!?!' and she'll say 'oh no I count frames sold that's how I figure out how busy we've been.'. Does this make any sense? Now the management people and MD's who know nothing about running a dispensary have started to do the same thing!

My take is that while it's important to track how many frames have been sold in a given period of time you need to look at how much MONEY the dispensary is taking in not how many frames have been sold to determine how well it's running. She doesn't take into account patients own frames.

I started thinking...do any of you use the number of frames sold to determine how profitable your dispensary is?

[obxeyeguy]

No. Only $$$! Money taken in, minus cost of goods(frames, lenses) = gross profit.

[Carbon Pit]

See that's how I look at it to.

[Fezz]

I started thinking...do any of you use the number of frames sold to determine how profitable your dispensary is?

I sold 3 frames last month.

They retailed at:
1.) $48.73
2.) $1679.33
3.) $23, 586.00

Was I profitable?

I sold 679 frames in November.

The total for all of them at retail was $617.00

Was I profitable?

[Johns]

I started thinking...do any of you use the number of frames sold to determine how profitable your dispensary is?

You're kidding us...right?

If someone steals a few frames and you don't notice it, does that make your profits go up?:hammer::hammer::hammer:

[mitchellvision]

Wouldn't that be net profit?

[Bowmanconsult]

Keep in mind that she may not have access to financials in her office. That's more common than you might expect. Too many owners like to keep this information to themself.

At least she is monitoring 'Trends', and monitoring trends can be a VERY effective tool in most practices.

Counting frames sold will also help you monitor your frame 'turn-over ratio'. Most successful practices should turn over their inventory 2.5 - 3 times every year.

Example; 500 frames on display, 1,300 frames sold in a 12-month period of time gives you a 2.5 turnover ratio. That's a healthy ratio!

500 frames on display and 1,000 sold gives you a ratio of 2...you have too many frames, OR the doctor needs to make better recommendations in the examination room.

500 frames on display and 1,600 frames sold and you're doing better than most of your colleagues!!!


Tom Bowman
Practice Management Consultant
PracticeMentors@Gmail.com

[For-Life]

Both are important. Frame count probably is a better indicator of how busy they were. Dollar count is important to keep the business driving and see how efficient they are.

For instance, if I do $40k in sales, how busy was I? Tough to tell. If my average sale is $800, then I sold around 50 frames. Which means about two sales a day (6 days a week in a month). Now, if the average sale is $200, then you do about 200 sales a month or 8 a day. Now, believe or not, the average time level to do a $200 sale and a $800 sale may be around the same. Which means that it takes more time to do $40k with average sales of $200 versus $800. Therefore, 200 frames means that the staff is more physically busy versus the 50 frames.

Now, what matters to pay the bills is profit. You will have an idea of what your annual revenue needs to be to = a certain profit. So the question there would be how much did you make in sales last month.

But I think you can see from this example that frame count can be a valuable tool to help you evaluate operations. It provides information that revenues alone cannot. However, revenue is probably the most important part, because it is an easier information source to produce the question "how viable are we?"

[Fezz]

I suggest that at the next staff meeting that you suggest an even better way to gauge profits!

Suggest to these Brainiacs that from now on, how busy the office is and the profits should be based on the amount of lolipops taken from the lolipop basket! The busier the office, the more suckers missing!


;):cheers::cheers::cheers::D

[Fezz]

Do they determine how busy and profitable they are by the amount of company logo magnets that disappear a month?

[Fezz]

I know a whole bunch of offices that take every inurance plan under the sun. Some of them are VERY busy! They blow a huge amount of frames out a month.


None of them are profitable! In fact, most are treading water at best! But, they sure are busy!


;):cheers::cheers::cheers::D

[Johns]

I suggest that at the next staff meeting that you suggest an even better way to gauge profits!

Suggest to these Brainiacs that from now on, how busy the office is and the profits should be based on the amount of lolipops taken from the lolipop basket! The busier the office, the more suckers missing!


;):cheers::cheers::cheers::D

Did I mention that I almost spewed coffee all over my keyboard!

TOO FUNNY!!!!!:bbg::bbg::bbg::bbg::bbg:



(The sad part is, it make more sense, to my simple mind, than counting frames.)

Why not just count the number of cars driving by, and subtract the number of cars in your parking lot, add it to the amount of money you owe, and come up w/ an exact number?

[Johns]

Keep in mind that she may not have access to financials in her office. That's more common than you might expect. Too many owners like to keep this information to themself.

Tom Bowman
Practice Management Consultant
PracticeMentors@Gmail.com

How could you expect someone running your office to determine profitability, and not let them have access to the financials? How do they even know what their net cost (shipping/discounts/etc...) are w/out access to the statements, invoices, and other pertinent information?

Sure, you can count cones at a dairy queen because you've got 3 sizes, and the product costs the same, but I still don't see how counting frames could do anything but give you an idea of what's going out the front and back doors.

[Bowmanconsult]

Maybe some of you need to read the original post again.

This was one optician talking to another optician...nobody said she was 'management'.

Also, they were'nt talking about how profitable the practice was...just how busy the practice was.

Those who simply look at the financials to determine profitability may be missing the boat and have way too many frames on the board. I see this happen all too often. That doesn't make good financial sense no matter how much money a practice nets. It's necessary to determine your frame turnover ratio.

Those who simply count frames sold are even more foolish than the ones only looking at financials.

A well run practice will take both of these areas into account.


Tom Bowman
Practice Management Consultant
PracticeMentors@Gmail.com

[Fezz]

Maybe some of you need to read the original post again.

This was one optician talking to another optician...nobody said she was 'management'.

I did read the post again!

It seems that management has followed her lead!

OK I work for an MD practice that has two locations. Every once in a while I'll call the other optician to see how busy they have been. I say 'how much have you sold this month?' and she'll say something like 'yeah we sold 34 last month' my response 'you sold 34 grand!?!?!?!' and she'll say 'oh no I count frames sold that's how I figure out how busy we've been.'. Does this make any sense? Now the management people and MD's who know nothing about running a dispensary have started to do the same thing!

My take is that while it's important to track how many frames have been sold in a given period of time you need to look at how much MONEY the dispensary is taking in not how many frames have been sold to determine how well it's running. She doesn't take into account patients own frames.

I started thinking...do any of you use the number of frames sold to determine how profitable your dispensary is?

[obxeyeguy]

Those who simply look at the financials to determine profitability may be missing the boat and have way too many frames on the board. I see this happen all too often. That doesn't make good financial sense no matter how much money a practice nets. It's necessary to determine your frame turnover ratio.

Those who simply count frames sold are even more foolish than the ones only looking at financials.

A well run practice will take both of these areas into account.


Tom Bowman
Practice Management Consultant
PracticeMentors@Gmail.com

I know that you are in practice management, and obviously sell your services to others, but that statement makes little sense to me. Would you not figure in to the number of frames the acquisition costs of those frames as opposed to strickly the number of frames?

You can very easily have 1000 frames at less cost than 200 frames, but I'm just working with your numbers here. You turn 400 frames a month for the year for a total of 4800 frames. The first example shows a turn of 4.8 times, and the second shows a turn of 25. Which office is more profitable??




Times up. I don't know. The reason is the number of frames sold tells me nothing without other data. But even with the other data, why would I care, if it's profitable? Your office service may be built on the fact that you have more frames than anyone else, and it brings in business.

One more reason we don't need pra...........:hammer:

[Johns]

Maybe some of you need to read the original post again.

This was one optician talking to another optician...nobody said she was 'management'.

Also, they were'nt talking about how profitable the practice was...just how busy the practice was.



Tom Bowman
Practice Management Consultant
PracticeMentors@Gmail.com

What am I missing here? Did they not ask if we use the number of frames sold to determine how profitable your dispensary is?

I started thinking...do any of you use the number of frames sold to determine how profitable your dispensary is?

[rbaker]

Your Balance Sheet and a Profit and Loss statement uses dollars and not units. Your IRS tax burden is computed using dollars and cents not the number of frames or lenses that you sold.

I would imagine that the owners of the business have an effective accounting system in place and that the actual financial metrics are really of no great concern to the employee in question.

[Bowmanconsult]

Hey...I'm not here to fight...I'm here to help.

The comment; "Now the management people and MD's who know nothing about running a dispensary have started to do the same thing!" doesn't necessarily tell me that their office stopped going over their financials in lieu of counting only the frames that were sold. Hopefully it tells us that they are starting to look at this area also...HOPEFULLY!

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I know that you are in practice management, and obviously sell your services to others, but that statement makes little sense to me. Would you not figure in to the number of frames the acquisition costs of those frames as opposed to strickly the number of frames?

You can very easily have 1000 frames at less cost than 200 frames, but I'm just working with your numbers here. You turn 400 frames a month for the year for a total of 4800 frames. The first example shows a turn of 4.8 times, and the second shows a turn of 25. Which office is more profitable??

Times up. I don't know. The reason is the number of frames sold tells me nothing without other data. But even with the other data, why would I care, if it's profitable? Your office service may be built on the fact that you have more frames than anyone else, and it brings in business.

The confusion here is that we're talking (or at least I am) about two totally different areas of practice management. Profitability and Inventory Management.

Counting frames sold doesn't tell us how profitable we are. The P&L's do this. Counting frames sold helps us determine if we have too many or too few frames regardless of our acquisition costs.

If a person goes to a garage sale and finds an item that they really didn't need but it was real cheap...was that a wise purchase? Not by a long shot!

Also, if a person thinks they are going to capture more market-share by simply having more frames than the nearest competition, they need to think twice.

Any good business course will tell you that inventory can easily be one of the biggest thieves any business can have, and it's all because very few doctors, managers and staff members have ever been taught about the importance of proper inventory management.

I was a certified optician, then c/l tech and then an office manager for 13 years (also the president of our state opticians association), and nobody ever taught me anything more than "We have 800 frame slots, so make sure we always have enough frames to fill the boards, try to vary the styles, and try not to have too much back-stock".

It wasn't until I was a 50% owner of a practice for another 13 years after that when I decided to work with my accountant and a business management group to figure this out.

Thank goodness I did!

There's a HUGE difference between being profitable and maximizing profitability. It took me a long time to learn that, and proper inventory management is a big part of maximizing profitability.


One more reason we don't need pra...........:hammer:

Exactly the reason we DO need pra............!

[Jubilee]

By chance, has this other office manager been with the big boxes?

When I worked for the LC, we not only compared dollars, but yes we compared units.

Units are not only helpful from a frame inventory perspective, but looking at units sold can help you look at the effect of sales and marketing promotions.

Some of the situations this can be helpful:

• You are now offering discounts on multiple pairs. What affect is this having? While yes, looking at the dollars gives you the amount of additional money you are making, looking at units gives you an idea of how effective your marketing tool is, and the potential long term implications (will those same patients next year want that sun or office pair?)

• Say next year that patient comes back and wants to put lenses only into their frame. You offer a 30% discount if they select a new frame instead. Is this useful?

• When evaluating the usefulness you then have to look at the dollars. With any type of promotion the idea is you make less per unit, but the volume makes up the difference. In assessing that volume and looking at your average dollar sale, is the additional $$ covering or worth the extra effort

• When comparing one point in time to another it is also important to look at units. I can not tell you how many times I was ticked working at LC when they had their 50% off lenses, or take a $100 off coupons and hearing that our net sales are down, when total units were up 25% or more.

• Labor

"You need to cut labor cause you aren't making sales goal!"

"We aren't making the dollars, but we are busier!"

"No you aren't your sales are down compared to last year"

"But our volume is up!"

"So, your average dollar is down $100 and your retail staff needs to be selling more multiples and premium lenses. Cut your labor by 40 hours this week"

And later that week you get a call asking why your lab didn't make their one hour goal, or your conversion was low...