Money Monday – Effective Budgeting
Delegation is trending. The difference between an overwhelmed Principal and a relaxed Principal is an effective manager(s). Someone to delegate to – someone who you can trust to do it as well as you would yourself, 90% of the time – and quick to learn when they produce 10% of results that are less brilliant than wonderful you. I often hear that “I cannot afford a manager(s)”. The cliched response is that you cannot afford to be without a good manager – the reality is that you didn’t budget (or budget enough) for a brilliant manager(s). Ah – budgets. Question: ” do you have a 12-month cash flow forecast for your business that allows you to update budget figures with actuals on a month by month basis (and notice KPI’s and variances from budget)?” If the answer is “yes” I congratulate you – you are a member of a minority group in dentistry. If the answer is “no” then you know where we are going with this. You cannot fly an aircraft with no dials in the cockpit and the windows blacked out. You will know that you are airborne but will have no idea where you are, where you are going, how high, how fast, when the fuel runs out – for that matter, which way up you are. In any business (yours or mine) the days are gone when you can just “work like hell” and see where you end up. Constructing a budget for your business requires:
access to the last year’s numbers so that you can extrapolate them
the ability to construct a spreadsheet
a half-day uninterrupted every month to review the updated numbers (collected and collated by your manager)
the ability to make decisions based on the numbers
The benefits to you will be huge. A greater understanding of just how money moves through your business. Peace of mind through knowledge. Quick course corrections that will reduce profit leakage and improve your bottom line. An essential understanding of the profitability of each surgery and each fee-earner. An analysis of marketing activities that work (more please) and those that don’t (stop that now). Identification of products and services that your patients desire (and those that they don’t). Put yourself in the pilot’s seat in your business, hire a co-pilot and a navigator, build a cockpit with a set of readings that tell you all you need to know to enjoy a safe flight and reach your destination. We are talking simple maths here.