14 Aug Do you know if your practice made a good start to the financial year?
In business, there are many clichés, some more useful than others. ‘You get what you measure’ is one of the more useful.
At The Specialist Hub, one of the services that we offer is to help you set cost and income budgets, and to keep your finger on the pulse of how you are tracking against your objectives, so that you can course-correct as needed.
Budgeting is critical to your success as a practitioner business. All too often we find specialists who hit a profit slump, and they are at a loss to understand why, or what to do about it. It’s a hygiene factor that can get pushed aside as other pressures take centre stage. If this is happening with you, it might be time to consider outsourcing.
How was your July?
Now that we are one month into the new financial year, it is time to evaluate your practice performance. Do you know how you did?
It’s pretty straightforward to do. All you need to do is run a budget variance report within your accounting software. This will give you the comparison between actual costs and earnings for the practice in July vs the budgets you set for your practice. Be sure that all your transactions are reconciled for the month of July to get an accurate report.
It is also important to check the performance against last year’s actuals. This comparison will give you a clear view of the growth rate of your practice and how you are managing costs versus same time last year. The following decision-making aid may be helpful in course-correcting if necessary.
How did you go with costs?
If your costs are under your July 2019 budget, well done! I recommend putting some surplus into the practice growth fund. As your business grows so will the need for additional resources, so it is best to plan ahead and be prepared financially.
If you have spent more than what you planned and are over the budget, have a look at where you overspent.
- Was it a necessary cost?
- Is it a one-off or ongoing?
- Where can you cut down over the next 11 months in order to make up the difference?
- If it was an unforeseen cost, how many new patients do you need to bring in to cover the gap going forward? Adjust your earnings budget accordingly.
Discuss the practice results with your staff and ask for their input and ideas. It is important to act quickly to recover the gaps to budget, as early on in the financial year as possible. One-month gap can be closed over the course of the year. A cumulative gap which grows every month will soon become impossible to close.
At The Specialist Hub, we help ensure that you stay on track. It’s so disheartening to get to mid-year, and realise that your goals are not attainable, despite your hard work.
If you’re finding that your private practice isn’t living up to your commercial expectations, then it may be time to call in external resource to help you make the changes that will make a difference.
For a free consultation on how we can help, please do not hesitate to call or email us.