Your 2018 Budget Just Got Simpler.
By Bryan Hoban, Member Business Manager, PECAA
Let me ask you an important question. Have you started working on your 2018 budget yet?
I know, the busy season will soon be in full swing. Your patients will be trying to use up the last of their flex spending or HSA dollars before they expire. You are probably on your third cup of coffee already, just trying to make it through your hectic day so you can get home on time tonight.
Now, I want you to do something for me, even though time isn’t plentiful. I want you to schedule fifteen minutes this week to sit down and start working on your 2018 budget. It doesn’t have to be a long or complicated process, but it does need to happen. Developing a budget is a fundamental step that needs to be completed in order to sustain a successful business.
What if I told you that I’ve already done most of the legwork for you?
I understand that it’s hard to find time to work on something that isn’t an immediate concern in your daily operations. However, budget planning is a step that, more often than not, gets overlooked or perpetually put on the back-burner, and I don’t want this to happen to you.
So, I have created a simplified budget planning template that you can use to estimate your net profit and monthly cash flow for 2018. Just enter in your 2017 revenue and projected 2018 growth rate and, based on industry averages, this template will calculate your projected revenue, expenses, and net profit.
Let’s look at an example. Dr. Smith of ABC Eye Care had a revenue of $750,000 in 2017, and the practice estimates that it will experience a 5% growth rate in the upcoming year. Dr. Smith also has a couple of loan payments in the amount of $2,500 and $650. We’ll enter in all of these numbers into the template.
Based on the numbers entered, we can now see ABC Eye Care’s projected earnings. However, we know it’s unlikely that our revenue and expenses will be the same month-to-month. So, we need to customize the template to fit our estimated changes to the practice in 2018. First, adjust the revenue of your historically busy months up and slower months down to better reflect seasonality. Then, consider expenses. If your expense structure varies from national averages, adjust the percentages to reflect that. Do you know of any one-time expenses for the year? In our example, Dr. Smith plans to hire a part-time associate doctor in April. The template will need to be adjusted for that change. The practice also plans on purchasing new equipment in August. This will change the equipment expense for that month.
See? Easy as pie. This budgeting template can be used to help estimate whether or not your practice is profitable on a monthly basis. Just make sure to customize the template to fit your specific practice projections. The best part? It should take you less than 15 minutes to complete.
To download this budget planning template, fill out the form below and you will receive an e-mail with a link to download the template.
Good luck, and happy budgeting!
Want help customizing your budgeting template?
PECAA Members have the privilege of working with Member Business Advisors (MBA’s) that have extensive financial backgrounds and optometric industry knowledge. These MBAs can help you further customize your budget to match the way your practice operates. Practice size and style heavily influence actual results compared to the industry averages stated in this template. This advisory service is included in the PECAA Membership at no charge. Plus, the MBA’s will review your data with you to help determine potential areas for financial improvement and lay out an action plan to achieve results.
Questions on PECAA?
E-mail us at firstname.lastname@example.org or call the PECAA office at 503-670-9200.