Episode 60: What's Keeping ABA Practice Owners Up At Night? with Returning Guest Jing Zhou

Because building a business is seriously hard work, and most people don't understand the personal sacrifice that the owners make for their business, such as the highs and lows and the feast and famine, and the challenges of balancing the needs of the clients and the employees and the business, and balancing the quality and the growth and the profit in the people-centered business such as ABA Therapy company.

So I get it, I've walked in their shoes and I really want to help them and I want them to know that it is possible to build a business with quality and profit. And that's why I do what I do and why I'm so excited to be here. Because you share the same passion for supporting better ABA businesses. So to answer your questions about what has changed, wow, it's been a year. Time went by really fast. Um, here are a few of my observations about the changes this year.

I would say the first change I've seen is the layoffs in our field this year. Which is not often seen in a field in such high demands such as ABA. And the second one, I would call it more of a trend instead of a change. I've seen more discussion around ethical business practice of running a ABA business, such as is it ethical to tell parents to take their children out of school to participate in a 40 hour of ABA therapy program? Even when they're doing well in school?

And is it ethical to turn down kids unless they can commit to a 40 hour program? So I feel like the more discussion we have around these topics, the more we can protect the integrity of our profession. So those are really good, healthy discussions in our field. Um, another trend I've seen is shifting focus on applying the principles of ABA in more compassionate ways. I've seen more people talking about the application of our principles and fundamentals in more compassionate ways.

The fundamentals haven't changed, but the application of our science is definitely evolving.

Right? And so these are like really gutting and hard things to get through. But I'm curious, what are some of the issues that you see that are keeping ABA practice owners up at night?

And it costs the company the time and resources to replace and train people, and it increases the workload for the existing staff and it destroys the morale when people are constantly seeing the turnover, people are coming and going, and they have to do more work when other people are not around. So it really affects existing staff and it decreases the clinical quality and the clients are missing out.

And what's worse is the parents will lose trust in ABA and thinking ABA doesn't work, which ABA can be life-changing. So let me ask you a question. Do you think you can hire the right people based on a 30 minute interview?

So having a thorough hiring process that is unique to your culture is essential to get to know the candidates better, as well as for them to get to know you because there has to be a good fit on both ends. So I usually would recommend to my clients. So creating, uh, multiple points of interaction during a hiring, asking better questions during the interviews. Seeing the candidates in formal and casual settings can help you know the candidates better.

As well as using some pre-employment tests such as DISC assessment, StrengthsFinder, or predictive indexer. So many of them. Those tests can help review more information about the candidate's motivation and personality. And we used the DISC assessment in the past, so it was really helpful in finding the natural fit for certain positions, um, and also for the supervisors to learn more about this employee and how to motivate them.

For example, if someone is high on I in the DISC profile, that employee would need more of that pat on the back for them to feel encouraged and feel, uh, appreciated.

But someone who is really high on D and they're already driven by completing tasks, so they're task oriented, so they're not as, um, motivated I guess by that pat on the back versus someone who is high on D and if I'm hiring someone for a financial position, so I absolutely need this person to show a high on C, a high C naturally, they're very attention to detail and very, uh, organized.

So that really has helped tremendously once we started using the DISC assessment to find the right natural fit for the position that we're hiring for. Um, and a thoughtful hiring process that reflects your culture can attract the right candidate. And you guys have one at Ascend and I love the article from Stanford about your hiring process that really let the candidates experience your culture. So that is amazing.

I share that with, uh, my clients for them to kind of read the article and understand, reflect on their own hiring process. Does that reflect your culture? Improving the candidate's experience during the hiring process is super important in a competitive market these days to attract the right candidate. I was reading an article about the candidate's experience during the interviewing process.

So They surveyed 500 job seekers and they summarized that 67% of job seekers have had at least one negative experience in the hiring process in the last 12 months. So that was in 2021, and 58% of the job seekers had declined a job offered, due to poor, experience. That's very high number. If they don't have a really good experience during that process, people will decline the job offer. So that doesn't help the organization find the right fit.

If they didn't create a good experience for job seekers during their hiring. And once they hire the right people, and of course you have to maintain that relationship. Like any relationship, a relationship is built on mutual respect and trust, as I mentioned earlier. So do your employees feel respected? Do they feel you care about them as individuals? Do they feel you care about their growth and their best interests? People wanna grow in an organization.

Do they feel like the organization cares about their growth? And of course your experience during the onboarding process and their ongoing training and coaching they receive all play a significant role in the retention

And you know what really blows my mind, Jing, is when I still hear of organizations that's like 30 minute interview for a BCBA, and it's like, you've got a heartbeat and a credential, then come on over. Like how are you differentiating yourself? How are you, to your point, helping a candidate understand what is unique and therefore special and powerful about your organization? But let me ask you, cuz I'm a huge fan of the DISC.

I'm an I both my natural and adapted and I'm an I with a little d and um, it's funny cuz it's what, what do Is want most to be liked, and what do they fear most is like not being liked. Whereas ds, what do they want most options, what they fear most being taken advantage of? So it's a really neat construct. I mean, there are many, many different tools out there. I gotta ask, what DISC style are you?

So I think DISC is a very good tool just for ourselves to be aware of our strengths and area to improve, as well as understanding the employees, um, and what they need and what motivates them based on their personal personality profile.

I wanna find out more about myself and make sure I am, um, I am super aware, so that my team members also view that quality. But one of the things I really like, Jing that you and I have talked about before, you have this expression about going from doer to who'er mode. Tell me more about that, Jing, um, and especially in this context of the most important things that an owner needs to do to successfully and sustainably scale their practice.

And I quickly had to learn to delegate and to trust and empower my team because there is no way I could grow and scale the business if I had to be in everything in my business. Had to do everything. So owners who do everything and need to be involved in every detail aspect of their business, they become the bottleneck of their own growth. So to grow their business, they have to raise the lid, and it is not scalable. No one gets 48 hours in a day.

And the owners need to accomplish the goals through their team. So they have to become really good at achieving things through others, not just personally do them themselves. So instead of asking yourself, how can I get it done? And you ask yourself, who on my team, or who in my network can do this? So shifting from a doer mode to whoer mode is all about effective delegation and coaching people up, so the right who can do the how and not personally figuring out how am I supposed to do it.

So you think about who can do this. So the owners need to focus on growing their business. They should delegate pretty much all tasks that keep them from growing their business and tasks that they're not in their wheelhouse, for example, like the credentialing and billing. And if it's not in their wheelhouse, they should delegate or outsource to companies like Element or somebody else in their organization to do that.

And any tasks that they are not passionate about, even though they're very good at it, they should delegate. So, for example, I'm very good at numbers and actually I'm very good with revenue cycle management, looking at the claims and the bookkeeping and any of those, but I had no interest in those things, so I'm not passionate about them and I hate those tasks.

So even though I'm very good at those and I still delegate and we had an entire team, so handling those numbers and things like that, but I will oversee them. And things that they want their team to learn, they should delegate. Otherwise, how is their team going to learn those skills? So if the owners, keep thinking I can do it better than anyone else. And I used to always think like that, oh, I'll just do it because I can do it better.

And then I have to stop myself and to think about I have to teach my team to do it. Otherwise, how are they going to learn if I keep doing them at myself? So it is essential to take the time to teach the employees how to do things, and don't be afraid that they may make mistakes, and it might be easier for you to just do it yourself. Just like tying your kids' shoes. It's easier just to do it yourself, right? But you have to teach them.

So a good book to read about this topic is Dan Sullivan's Who, Not How.

But if you're not spending time intentionally teaching them to do that, then you're cursed forever to have to keep doing those tasks. And, and so here's what the imagery I got in my head that you for the first time, like, and you helped me see this. I love Marvel movies and DC but think about any superhero, from a Batman to Superman to Thor to you name it. Which superhero actually scales and teaches others to do what they do? None. Because those superpowers are not, that's not scalable.

So this idea of intentionally delegating, but then spending the time to teach your team, spending the time knowing that they're gonna make mistakes. Cuz guess what? You and I made mistakes, plenty. I'll speak my, for myself, I made plenty of mistakes. Right? As an owner. Like that's just part of that learning process that feels so crucial to building a sustainable practice, right?

I'll be super honest, it's hard to make money and run a quality organization and deliver highest quality services to kiddos. What advice do you have to ABA practices who are trying to get profitable?

And only focusing on profit is not going to increase profit. So my philosophy on profit is that people and quality drive profit, we cannot have quality without good people. So the focus has to be on the people first. And certainly responsible financial management is necessary to keep the financing checks so that you're not overspending and you, you are spending more than what you're bringing in. As I see it, many ABA businesses have people problems that contribute to profit problems.

As I mentioned earlier, turnover is a huge pain point for many ABA companies. Certainly this problem is not just in our field. And what do you think the cost of the turnover is for a BCBA position and for a RBT position? What's your estimate?

So if a business loses one BCBA and five RBT s in a year, the cost could be like $120,000 that hits their bottom line. So if a company can improve their profitability, by solving the people problem, and they can definitely become more profitable if they're better at hiring and retention. Because sometimes you might not see how that is really affecting the profitability. So better people strategy will lead to better quality and quality drives the business. So that's my first advice.

My second is around responsible financial management. And you don't really need to be having an accounting degree to be a business owner, but you have to know your numbers. Unfortunately, many BCBA owners that I've worked with do not really know their numbers well, and I work with a lot of them on understanding their numbers.

So the owners have to know their revenue numbers on an accrual basis, and they have to know their direct labor cost and admin labor costs and their profit margin, and then need to have regular financial reviews on the profit and loss and cash position, and project their financials and understand how fast their business can grow based on the cash flow and based on their operations, unless they have capital investment. And they have to rely on the money that comes from the operation.

So they have to understand how fast can they grow so they don't die from undisciplined pursuit of more and more while their cash flow operation cannot support that growth rate. So when I grew up, my parents always taught me to spend less than what I earn. So I apply that in pretty much my personal finance and the business. I've always ensured a healthy level of profit that provides the security for the business first and spend what's left on operations.

So after we have secured the profit and kind of take that off the table and then budget around what's left. So this method didn't let me grow as rapidly as some of the other larger companies with, uh, huge financial investment, but we had steady growth year over year and I was profitable from day one, and I've not had any year that we were in a loss and I was not in debt and I had good cash reserve for rainy days and did not have to worry about payroll.

Our employees were doing a great job and kids were making progress and parents were happy, and that was good enough for me and that was success. So profit was never a big focus for me, and probably it was an area that I spent the least amount of time on. But I did have a strategy to manage it responsibly and review monthly after my bookkeeper updated the books. So I wanted to see the numbers where we are from month to month, so if there's anything that we need to, uh, correct and course correct.

And usually when you look at the financials, so it's already late, it's a lagging indicator. So we do have like weekly scorecards that track the leading indicators. So such as the volume of leads, calls, and interest for our services, how many clients were enrolling, each week, and what are our service hours look like week to week. So those are your leading indicators. So that would allow you to course correct sooner before you look at the financials.

So I feel like that worked for us and it may not work for every other company or different sizes of company but that's kind of how we manage it. And I managed to be profitable over the last 20 years when I owned the business. And actually there's another book, um, called Profit First. Mike Micalowitz wrote the book that kind of conceptualized what I was doing. I just read the book this year. I thought, oh wow, that's what I was doing.

And then offered a validation and he introduced the concept of revenue minus profit equals expenses instead of the traditional view of revenue, minus expenses equals profit. Whatever gets left after you spend is the profit. So he kind of did it the opposite way.

So I think this is genius advice and, and you know, that the notion of, we don't see on our P and L a specific line item for turnover, much more insidious, right? It's like, oh, okay, maybe increased hiring costs. Um, maybe it's decreased BCBA utilization or time, um, maybe it's phantom revenue that never was earned, right?

So it almost, it appears in all these different places across the P and L. To your point, I mean, tho those 18,000 and $30,000 number figures you quote, I believe a hundred percent. Um, and so this is why sometimes we don't think enough about how we can use antecedent strategies to prevent turnover and use leading indicators.

Um, to your point around like do weekly post scores with your team, see how your team members are feeling, and that can be a leading indicator to to whether or not they might turn over in the future. But act then as opposed to, to your point, financial indicators that happen on the back end. So let's say like, we know layoffs are happening, referenced this earlier, Jing, um, and this is of all sizes of providers, right? And, you know, for-profit, nonprofit, PE backed, not PE backed.

That's what we're seeing in our field right now. How should an ABA practice owner determined whether to make a layoff and are there right and wrong ways to do it?

So to be in the shoes of someone who has to be on the chopping board, I hate to use that word, and um, I think the best way to deal with layoff is to prevent one, and business owners and leaders have the responsibilities to their people, so they have to manage the financials in a responsible way so kids don't lose needed services, and then people don't lose their jobs due to no fault of their own.

And HBR, Bain and McKinsey all did studies on companies that not only survived, but thrived during and after economic downturns. In these studies, they discover the difference between thrivers and failures is preparation.

So companies can prepare for financial hardships and economic downturns by investing in technology, strengthening their leadership, developing relationship with their banks to have a strong line of credit, building a cash reserve, diversifying revenue sources, retaining their most profitable relations, prioritizing spending and cost savings so they can prepare for those things ahead of time.

And companies should evaluate and pre-select a labor reduction strategy in the event labor reduction is inevitable. So the leadership team should discuss what would happen in their workforce if their revenue reduces by 20% or 30%, they should decide whether to reduce their workforce by, let's say, 10% or reduce work hours by 10% or reduce compensation by 10% in order to weather through the hardships.

And a lot of times I've heard companies actually, when they plan and discuss that ahead of time just for preparation, and they prefer to reduce compensation by a certain percentage temporarily to get through the hardship rather than just laying off a lot of people. So I think the best way to deal with that is to prevent one if they can, and especially in our field, there is such a strong demand for ABA therapy, and it's really difficult for me to even think that layoff would happen.

So if it's planned and managed well, and there are definitely the right ways and the wrong ways of laying people off and sending an email without any prior notice is not the way to do it. And for leaders, putting themselves in the shoes of the employees and asking themselves, if I was the employee being laid off, how would I like it to be handled?

That can put more care and empathy in the process and, even though it is a difficult, thing to do, but at least we can put as much care and empathy in the process as possible.

Well, if that growth doesn't come, then all of a sudden you're faced with, having to make unsavory decisions. But that scenario planning is a great point to to figure out what you're gonna do if, if you do get there and take some of that emotion, um, out of decisions that you might have to make to keep the business alive and running.

So in our situation, we've had like receptionists and who could go into the classroom to help the kids if it's necessary and so that person is more adaptable to be in different positions within the company, so that helps not having to like cut people because it can't be moved, shifted in somewhere else in the company.

It puts things in perspective when I feel stressed. So it helps me to think, is that a small stuff or is that a really big, huge thing? So a lot of times it's just really small stuff. It's not life or death, right? No one bleeds. No one dies. So just relax and let go.