How refractive surgeons can beat the 2023 recession
You’ve heard of a perfect storm, right? It’s an especially bad situation caused by a combination of unfavorable circumstances.
We’re heading straight into an economic one. For the unprepared, these factors will make 2023 one of the toughest years on record to achieve your profitability goals. Refractive surgery practices worldwide are facing:
- Inflation higher than it has been in 40 years
- Unemployment at the lowest rate since 1974
- Wages steadily rising
First, the bad news. But hang in there, because next, you’ll see how recession conditions provide opportunities for those with a plan. Your focus for 2023 need not be about mere survival. Discover a plan to take home more profit in 2023, despite an obstacle like 10% inflation.
Inflation is the highest it’s been in 40 years
In September 2022, the rate of inflation in the UK was over 10%: which is the highest it’s been in over 40 years. In the US, Inflation has soared as high as 8.3%. In Australia, the rate is 7.3%.
That means that if you’re operating a refractive surgery practice in the UK, you’re taking home £100,000 less for every million you earn. And across the pond in America, refractive surgeons will take home $83,000 less per million they earn.
Unemployment is at the lowest rate since 1974
Typically, increases in unemployment swiftly follow recessions, as you can see in this chart. The gray bars are recessions, and the blue line is the US unemployment rate.
In the US, jobless claims in September 2022 were 213,000, the lowest rate in 50 years. Because short-term job security leads to confident requests for cost-of-living wage increases, it will cost you more to keep people in 2023.
Equally bad is that double-digit unemployment typically follows recessions. You can expect that there’ll be fewer people in the market for middle-class luxuries like refractive surgery.
Wage increases without correlative productivity increases lead to shrinking earnings for businesses
The average wage increase is 5.9%. When young people hop jobs, the average wage increase is 12%. In the UK, the rate of annual pay growth for total pay was 6%, and the annual pay growth for regular pay was 5.4% from June to August 2022; this is the strongest growth in regular pay seen outside of the pandemic period.
The average Labour:Sales ratio (the proportion of sales spent on labour) is 20-35%, and it can be as high as 45% in healthcare. That means that, due to the average wage increase, the average business owner will net $11,800 – $20,650 less per million in sales.
What are your options?
You have three options:
- Fire your staff and produce less profit
- Find a way to cut your expenses
- Raise your prices and become a better marketer
You see, the question isn’t “How can you net the same despite inflation?” The better question is…
How can you net more despite inflation?
The truth is, no one knows what’s going to happen, so the best you can do is use scenario planning.
- Scenario A: Assume everything stays the same.
- Scenario B: Assume sales are down 20%, but costs remain more or less the same.
- Scenario C: Assume sales are down 20% and costs increase 10-20%.
These are just some examples, but you get the idea. The point is, if you allow yourself to “live” possible scenarios in the future, you’ll not only be less surprised if they happen, but you’ll also have a baked-in plan for what to do should a given scenario come to pass.
That’s precisely what we did when we laid out scenarios for what might happen to refractive surgery during and after the pandemic. We’re doing it again with the looming recession of 2023.
Guessing is gambling, but we can all prepare by creating a game plan. We’ll be sharing our recommended game plan at the upcoming webinar below. Join us to get your practice planning in place for 2023.
Webinar: How refractive surgeons can beat the 2023 recession
Date: Tuesday December 20th, 2022
Time: 10AM PST / 1PM EST / 6PM GMT
Duration: 45 minutes
Make sure you sign up, and you’ll get sent the replay, even if you can’t make the live event itself.