Plan your income as well as your expenses
It is December, the end of the fiscal year. Year-to-date, have you been over- or under-budget? Do you know?
Do you, in fact, have a budget?
A business budget is a formal way in which you make spending decisions to achieve the goals and objectives of your business, to pay the costs of staffing and housing your practice and to invest into technology, equipment and training to keep your practice up-to-date.
But — to spend money, you must first make money. So, the budget — the spending plan — can only be developed after you plan on how you will generate your income.
The business plan causes you to consider your prospects, shape your practice and logically look at what can be expected. A good business plan takes an in-depth look at your business and that of your competition; where you want your business to go (and what could keep you from getting there); and how you plan to get there.
Once you assign dollar values to the tasks that you have proposed to generate and conduct business, you can cut or increase your budget and know what you will have to do to achieve the revenue needed. You may make compromises, just as you do in your personal spending, but the plan allows you to know what you have to do in order to achieve that next step or where you can cut if needed.
Once you develop a budget, you have a guide to help you control business spending so that your business can become profitable. Without a budget, you would have no idea where the money is being spent. It would be similar to prescribing a treatment for patients without seeing them, studying their symptoms, analyzing treatment methods and following up with the results of the treatment.
Here are some tips for planning and budgeting that will help you with the process:
• Plan for the future. A sensible long-term financial strategy is the most prudent way to conduct your business. Don’t overstate projections — it would be better to underestimate the success of your practice or a campaign.
• Be innovative in your marketing. Look
for promotional campaigns that are cost effective. Often, your most successful campaigns are ones that use your talents without breaking your budget.
Are you a good speaker? Consider giving educational seminars to local organizations. Do you like to write?
Start a quarterly or bi-yearly newsletter that keeps your patients informed on the latest chiropractic benefits and any news about your practice. It would be great to include case studies that help illustrate the benefits of chiropractic care. A newsletter is also a cost effective way to reach potential clients.
• Measure your success. It doesn’t make any sense to keep advertising in a publication if the ad fails to draw patients. Make sure that you are getting a return on your investment.
• Use information and programs offered by your suppliers. Many companies offer support services with little or no cost to you.
• Know your fixed expenses and factor them in. Staffing costs, any loan amounts, telephone, utilities, rent — any payment that is due on a regular basis — can be considered a fixed expense. While you may be able to cut back some on these, they are generally expenses that remain constant.
• Keep sight of your cash flow. If money is not coming in as scheduled, or going out faster than scheduled, reduce expenditures to get through difficult times.
• Don’t forget taxes and insurance. Often your account may appear to have an excess of cash.
Don’t count on these finances as they are only temporary “excesses” and will soon disappear. Spending the excess will only lead to cutting from somewhere else in the future.
Dr. Jeffrey Olsen is a 1996 Presidential Scholar and summa cum laude graduate of Palmer College of Chiropractic; Dr. Olsen has been in private practice with his two partners/brothers since 1997, in Roanoke, Va. In addition to his practice, Olsen has instructed as an adjunct faculty member at the College of Health Sciences in Roanoke and is a member of the Footleveler’s speaker bureau. He can be contacted at 540-772-8000.