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A budget is the key to success for any business. And for a medical practice or business in the allied health industry, it’s no different.
Putting together a budget should be an annual exercise, but many medical practices never establish one, or if they do, never look at it again, deeming the entire budgeting process useless.
Medical practices like these will face many problems from supply waste (including underutilised rooms), inadequate savings, staffing shortages or being over staffed, and that’s just the beginning.
An effective budget will mean great things for your business and create a better practice overall. But what is an effective budget and how do you begin putting it together?
What to include in your practice budget?
Budgets involve the allocation of financial resources and should be developed as part of the practice’s strategic (long-term) and business plan (one year).
There are four key elements to a budget:
- Income forecast;
- Expense budget;
- Profit and loss budget; and
- Cash flow budget
So how do you go about putting it all together? With a few important steps.
Step 1: Track your expenses
Your budget doesn’t have to be overly complicated. Just start by simply tracking your practice expenses.
Many Doctors and allied health professionals, along with many other professions, are not taught at University how to budget for their business. They don’t know the costs associated with their business, much less what they should be.
Start by listing every single expense associated with your business, and putting these into categories, detailing them as much as possible. Depending on the practice, the number of expenses and categories will differ. If you are unsure, talk to your business advisor to check that you have thought of them all.
Once you’re clear on all your expenses, you can begin tracking them.
Step 2: Use budgeting benchmarks
The next step is to use the list of expenses you have created and build a budget for your practice.
So, What is benchmarking? It’s when you compare key points from your business with other in a similar position. This is typically done by obtaining national or regional family practice overhead statistics for each category in your List of Expenses and then adjusting those benchmarks to suit your practice.
Step 3: Regularly compare your actual expenses with your budget
A budget serves no purpose if you don’t periodically compare your practice’s actual income and expenses with your budget and make necessary changes.
To use your budgets effectively, you will need to review and revise them frequently. This is particularly true if your business is growing and you are planning to move into new areas.
Are you a medical professional who needs help putting together a budget for your Queensland practice? We can help.
At OnPoint Advisory, we have over 25 years’ experience in working with doctors and allied health professionals and can help you put together a budget for your practice. We take the time to get to know our clients so that can you feel confident with us.
Contact us and book an appointment to discuss your practice budgeting needs today.