27 Feb Budgeting for your medical practice success
When running a medical practice, it is easy to get bogged down with the mundane day to day issues and lose sight of the bigger picture. The more successful medical practices we deal with allocate the time to create and manage budgets, prepare and review business plans and regularly monitor their financial situation and business performance.
What is a budget?
Budgeting is the basis for all business success. It helps with both planning and control of the finances of the medical practice. If there is no control over spending, planning is futile and if there is no planning there are no business objectives to achieve.
A budget is a plan to:
- control the finances of the practice
- ensure that the practice can fund its current commitments
- enable the practice to meet it objectives and make confident financial decisions; and
- make sure that the practice has money for future projects – be it fit out upgrades, IT systems, equipment, renovations etc.
What does a budget do?
A budget supports your medical practice’s annual business plan which in turn sets out the strategy and action plan for your business. This should include a clear financial picture of where you stand now – and expect to be – over the coming year.
Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving patient services, reducing costs and increasing returns on your investment.
Planning helps to provide:
- Clarity of priorities- By taking the time now to set a budget, you will free up time in the future and give yourself the best chance of achieving the rewards you want for your hard work. it allows you to create a focus for the direction of your practice and provides priorities and targets that will help your practice grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business.
- Continuous improvement – The key benefit of business planning is that a greater ability to make continuous improvements and anticipate problems;
- Confidence in your decision-making based on sound financial information;
- Control – remember, a budget is a planned outcome rather than a forecast;
- Plan expenditure and restricts any spending that is not part of the plan. This allows for strategic, long-term planning for everything from current operating costs to potential expansion. Knowing where the budget stands opens up the ability to hire new staff, develop new services and set earning goals in line the practice’s objectives;
- Measurement – As you move through the year, you can analyze whether you are doing better, worse, or exactly as you thought you’d be doing. A budget will help you be able to change strategy, when necessary. For example, if projected earnings are outpaced by unanticipated costs or, alternatively, if growth is higher than expected then how to manage staffing levels;
Review your budget regularly
To use your budgets effectively, you will need to review and revise them frequently. Using up to date budgets enables you to be flexible and also lets you manage your cash flow and identify what needs to be achieved in the next budgeting period.
Budgeting is the foundation for all business success. If there is no control over spending, planning is futile and if there is no planning there are no business objectives to achieve. In the words of Zig Ziglar “…. IF YOU AIM AT NOTHING, YOU WILL HIT IT EVERY TIME.”
Curve are experienced medical accounting specialists. We can help you develop budgets and plans to make calculated and informed decisions about your practice operations.
Contact the Curve team for a free initial discussion about developing a budget for your practice.