Business Financial Planning: Ready for the New Year?
It’s probably no surprise that getting healthy and getting organized are among the most common New Year’s resolutions, but they also make for great business goals.
With a new year upon us, one question naturally arises: Is your practice on track for a year of financial good health? Start the year off right with these quick tips from one of our senior finance managers.
Be Realistic With Your Financial Goals
Be realistic in the budgeting process. Setting revenue targets that go beyond your break-even point are only possible if you’ve anticipated cash-flow needs, distributions, accounts receivable, loan payments, and other factors.
That also goes for upcoming life changes, which affect the practice. If, for example, retirement is in the near future, make sure you’re on the right path to achieve your goals. Most people underestimate their cash needs in retirement. A financial planner can help you save, invest, and diversify early.
Dive Deep Into Your Current Financial Health
Knowing your starting point and where you want to go is a big chunk of the battle, and asking key questions can help you win:
- What is your current working capital?
- Has your financial health improved or regressed in the past 12, 24, and 36 months?
- What are the driving factors in your financial challenges or success?
- Given the driving factors of your past performance, what’s a realistic growth target?
- What vacations and other absences need to be accounted for in the budget?
- What, if any, industry trends should be considered in planning for the next 12 to 24 months?
- What is your current market share, and does your market support your target growth?
- Do your contracts support your professional and financial goals?
The answers to key questions like the above help you uncover gaps and identify additional support needs. To achieve growth, you might need to tackle billing and coding issues, refine your marketing strategy, or seek out professional-development opportunities.
Improve your team, maximize patient opportunities, and see revenue grow.
Keep Your Team in Mind When Financial Planning
Your staff plays a crucial role in financial planning, ultimately driving or hindering your success. Personnel costs typically comprise the highest expense, so always consider each team member’s skill set, goals, will, and potential when creating your financial plan.
Help your team help you by keeping everyone informed. The team needs to know and understand your expectations and how individual and joint contributions help everyone achieve their goals.
Track Your Performance
Identify your key performance indicators and check them on a daily, weekly, or monthly basis, as appropriate. Adjust your focus depending on how the business is performing to make sure you end up where you want to at year’s end.
One Audigy member’s detailed annual planning involves reviewing each of his locations’ individual key performance indicators. He wants clarity on how each contributes to the financial success of the business. Transparency, tracking, and focus collectively contribute to his success, which shows in the business’s multiple years of considerable growth.
When should you plan for the new year? Every day, because planning isn’t a single event with a start or stop time.
At Audigy we continually adjust based on movement throughout each year toward or away from goals. The budget is set each fall, but we forecast throughout the year in anticipation of budgeting season, always keeping in mind how our planning, decisions, and actions impact our longer-term goals.
Learn How Audigy Helps Practices Achieve Financial Success
Maintaining the financial health of a business is a nonstop task. Our Finance Team works closely with practice owners to help them confidently make the daily, monthly, and yearly decisions needed to thrive. Plus, Audigy members can benchmark against the entirety of Audigy and our members’ practices.