In the last two blogs, dental business mentor Andy McDougall from Spot On Business Planning looked into the four fundamental questions of the business planning process – to recap:
- Where are we now?
- Where do we want to be?
- How do we get there?
- How will we know when we have arrived?
In this blog we consider questions three and four.
Mapping out our journey – how do we get to where we want to be?
Last time, Andy said: “By financially modeling how we get from A to B, we can make mistakes on paper before committing to a strategy that feels realistic and achieves your financial objectives. The aim is to ensure our ladder is leaning against the right wall before we run up it. There’s no point in getting to the top of the wrong mountain, so before you start climbing, be clear about your final goals.
Measuring and managing your performance
How do you know when you have arrived? This requires setting up the correct, tailor-made management information systems that are specific to your dental practice and again, the measurement systems will be financial and non financial. Some metrics are necessary to every dental business and others will be unique to yours. For instance the financial performance in terms of profit; cash, stock levels, number of new patients, gaps in the book etc. Monthly management accounts and KPIs and these tracking systems are the method by which you can know for sure that ‘you have arrived’.
Year one of your plan will be broken down into a budget against which you will report the monthly results via management accounts. After three months you will need to reforecast (and this should occur for every quarter of the year) to accommodate and reflect events that are unfolding as the year progresses and which will influence your originally planned result.
Management accounts act as your business sat nav; they advise you on a monthly basis of how you are performing against your starting position and your planned finish. It’s important to measure progress because if you veer off track you are warned early enough that you can take corrective action quickly. In their truest form, management accounts don’t just report the result; they measure performance against plan and against prior year. Because your plan has been determined from the business planning process any variances can be analysed and where necessary corrective action taken.
This is a time-tested method that works every time
Business planning ensures you run your practice efficiently and makes certain that your business model is robust enough to deliver the profits you need in 2018 and beyond. It is a time-tested methodology that works every time – if you follow the steps with the correct level of detail.
Practices not undertaking this methodology will have profits locked away. It’s not just about working hard, it’s about ensuring you have set your dental business up to work for you – nothing special just a common sense approach to unlocking your profits.
What outcome can you expect if you follow the process?
Our clients would tell you to expect to double your net profits every three years.
Spot On Business Planning provides business-planning services that assist members of the dental community to respond to the dynamics of an increasingly commercial and competitive environment. Our tailored service provides straight-talking and results-driven advice and tools that transform performance.
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