Annual Planning. Surely two of the most boring words ever invented (when used one after the other, of course). That “thing” you’re supposed to do before the end of the year as a smart business owner so you can go into the New Year feeling confident that you have all your financial ducks in a row and the upcoming year will be wonderful and stress-free.
Believe me, as a dental consultant I know how you feel about annual planning:
“Do I have to?”
“Is it time already?”
“Can’t it wait a little longer?”
“Can’t my accountant do all this?
Yes, yes, no, and no.
Here’s the good news. Putting together a plan for your practice for the next 12 months that gives you a road map showing where you are and where you need â and want â to be can actually be a very satisfying process, even fun. Your accountant will be happy, too, because he or she is not (in general) a practice management advisor, but rather a tax and investment advisor. Working together is a win-win for all.
Whether you’re an established dentist with a full schedule, a great team, and a fully funded retirement plan, or a newbie who’s just starting out, the need for an Annual Plan is equally important.
Dr. Established, chances are good you didn’t get where you are today by putting your head in the sand and “hoping for the best” when it comes to financial decisions â¦ and at this point in your career you certainly don’t want to sit back and assume all the hard work is done. You’re on the right path. Stay there.
Dr. Newbie, now is the time to get your practice off to a strong start with a financial plan in place for the upcoming year that keeps you from making ill-advised financial decisions because someone asks a question and you don’t know whether to say yes or no. In my experience, more often than not, you’ll just guess, or take the path of least resistance.
Without a plan in place, for instance, how would you address these common office scenarios:
It seems like we need another hygienist, but I’m not sure the schedule can support that salary.
My staff is collecting more than 90% of our outstanding A/R. Is that good enough?
We seem to have a lot of cancellations and no-shows. Is that normal?
Our computers are 3 years old. When do I need to upgrade?
How many days a year do I need to work to support my salary of X?
I have a staff member who is causing friction in the office. What should I do?
I don’t have anyone on staff to handle social media. Do we even need to bother with that?
Questions 6 and 7 might not seem “financial” in nature, but they have financial consequences, and are, therefore, appropriate to consider when developing your Annual Plan, as are many more like them. Think of your annual plan as a treatment plan for your practice. Diagnose the issues, then decide on a course of “treatment” that best suits the practice’s financial needs and goals.
Give yourself and your practice a great holiday gift and put a solid plan in place for your practice that takes the guesswork out of financial decisions, and serves as a road map to helping you achieve your goals for the coming year and beyond. Whether you’re established, a newbie, or somewhere in-between, this is a process you can’t afford to ignore.
Editor's Note: For more information on the Academy of Dental Management Consultants, please click here.