Planning for profit.  Your success as the manager of your practice hinges on your ability to manage your one number – “profit.”   In accounting terms, profit is simply the difference between revenue and expenses, i.e., revenue – expenses = profit.  In order to manage for profit, you need to develop a “profitability plan” or budget.

Begin with the end in mind.  Don’t be intimidated by the budgeting process.   A budget is simply your goals for the practice in financial terms.  If you have accurate financial statements, you are well on your way.

Using your financial statements, develop a spreadsheet that includes the revenue and expense categories with amounts from the last twelve months.  Beginning with the end in mind, decide how much profit you want your business to generate.  This is your goal.  Starting at the top, work your way down through the spreadsheet looking for trends and making educated guesses about changes you expect in the coming year.  One note:  In my experience, most veterinary clinics are run pretty lean.   While you might be able to take out a percent or two by reducing costs, you’re probably going to need to find ways to increase revenues to make a significant impact on your bottom line.  This could mean a fee increase, adding new services, or both.

Don’t worry if you don’t get it exactly right the first time.  A budget is a “fluid document”.  Once created, it can be tweaked as necessary.  The important thing is to “Just Do it!”