Key person dependency – is your practice at risk?

Garry ChapmanUncategorized


Key person dependency – is your practice at risk?

For all the financial benefits of running your own business as a consultant in private practice, there is one big potential risk that you could be exposed to.

And that is… the business’ dependence on you or another member of staff like a practice manager or secretary as the main cog in the wheel. You may have started small but as your practice evolves and grows, this “key person dependency” may begin to hold you back and it can especially become a problem when it comes to cash flow.

To determine if your business has “key person dependency”, ask yourself these two questions;

  • Is there one person solely responsible for any or every task/decision making process in my practice?
  • If I were to take a couple of weeks (or more) out of my business, will it run as efficiently as it does with me or another person there?


SYSTEMS AND TRAINING: Key person dependency is when you or one of your team members is solely responsible for something, and there is no back-up plan. This could mean the techie stuff, the accounts or something else and there is no-one in the business to call upon to do the same skills.

So, if that key person disappears… your business would struggle, to say the least.

At MBC, we have consultants join us where their practice and the billing and collection is in various states of distress.  A common problem is the practice has grown and the admin support has not kept up with the growth.  On a couple of occasions, problems have arisen where the secretary has become ill and no-one was put in place to cover the billing and collection, the consultant managing to handle the day to day correspondence on his own for a period of time but this still does not remove the problem.

Here are 3 risk management strategies to combat key person dependency in your practice:

Teach someone else in your business how to carry out the same tasks, and at the same time, create a systems manual detailing each step of the process.

The manual will be useful for holiday leave, or any other cover requirement, or if your key person suddenly disappears.

This is also known as succession planning.

Succession planning is basically making sure you have a contingency plan if you or one of your key people should get run over by a bus tomorrow!


Depending on the size of your practice, you might not want to employ more than one or two members of staff to manage the admin side of the practice.  And often the secretary will have many different roles to fulfill as well as the very important job of managing patients. Even if there is a job sharing arrangement in place.

So although it is good to train staff in the various skills required which they can cover, another solution is to identify outsourcers who are specifically trained in your key-person area. This is becoming increasingly common with dictation, answering the phones or managing your billing and collection.


One of the best risk management tools is also the simplest. It’s called having a system.

So this means getting your key person to systematize as they go along. Whatever they are doing, get them to make notes along the way, and then record these notes in a central Systems Manual where everyone can access it.

If you are a sole practitioner, then it makes good sense to start compiling this Systems Manual immediately. Start by making a list of tasks you do in your practice this week, then make some time to go back and compose a “How to Guide” for each task – clearly stating where it fits into each process.

Then repeat this list on a weekly basis until you have recorded the details of every process and related task in your practice.

Store your Systems Manual where it can be accessed easily by a couple of trusted people around you – for example your partner or parents. Then if the situation ever does arise that requires you to take time out, any necessary handover process can be carried out efficiently.

Risk management is one of those processes a practice tends to ignore until it’s too late. So to avoid risk in your practice, make time this week to implement the above strategies to minimize your key person dependency.  And remember, outsourcing is an option. Especially for the all important cash flow which is crucial to any business so it might be an idea to start there.

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