We hope you’re been with us as we’ve walked through the eight ways to “stay from behind the 8 ball” in your practice’s financial matters. (We took a detour for a few weeks to report other interesting things, but we’re back on track!) This week we’re finishing the series. This is #8: Managing on a Budget
Does your organization have a budget? It’s an important guideline for decision-making, without which you run the risk of spending more than you should, or perhaps not spending enough to grow your business. You need to review it monthly, using the budget to identify where the difference with actuals are. Then you can take steps to get back on track, when necessary.
When you’re building your budget, see what you can learn about your industry. After reviewing benchmarks and determining what standards should serve as goals for your business, then you can build a budget that aligns with industry standards.
With a budget in place, you can measure progress toward achieving your goals, insure that you keep the right amount of cash on hand, hopefully build up an emergency fund, plan for short-term borrowing, and identify and address potential problems before they arise.
Of course, merely establishing a budget does not ensure success. If you historically spend 6% in a certain category, merely budgeting it at 4% will not bring your costs down. You may need to examine your ordering patterns, switch vendors, modify pricing, do more staff training – or any combination of these. It won’t happen just because you put some numbers on a page.
The big bonus of working with a budget is that it allows you to move from a concentration on financial management to a focus on your core business, and feel secure that the business will live on.
For more details and more of our eight tips on good financial management, seek out our article in the August TRENDS magazine, published by the American Animal Hospital Association. It’s entitled, “Financial Efficiency. 8 Ways to Keep Your From Being Behind the 8-Ball.”
Signing off for today…. Carolyn and John
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