Have You Started Developing Your Practice’s 2019 Budget Yet?
By Bryan Hoban, Member Business Manager, PECAA
I know this must be everyone’s favorite thing to do this time of year, but budgeting is an important part of setting your optometry practice up for success in the coming year.
Have you started developing your 2019 budget yet?
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. Your PECAA Business & Financial Advisors are here to make sure that doesn’t happen to your practice.
I have created a simplified budget planning template that you may use to estimate your practice’s net profit and monthly cash flow for 2019. Just follow the simple instructions below, and this template will calculate your projected revenue, expenses and net profit.
Instructions for Completing Template:
1) Input 2018 Collected Revenue
2) Input expected 2019 growth rate
3) Input any monthly optometry loan/equipment payments you have
4) Save a copy or duplicate the sheet before writing over any formulas in the following steps
5) Adjust monthly revenue to reflect seasonality
6) Adjust any expense percentages if substantial variance from industry averages
7) Account for any one-time events, such as the purchase of equipment or changes to staffing
Let’s look at an example.
Dr. Smith of PECAA Eye Care Center had a revenue of $750,000 in 2018, and the practice estimates that it will experience a 10% growth rate in the coming year. Dr. Smith also has a couple of loan payments in the amount of $1,500, $500, and $1,000. We’ll enter in all of these numbers into the template.
Based on the numbers entered, we can now see PECAA 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 2019. 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 staff member in August. The template will need to be adjusted for that change. The practice also plans on purchasing new equipment in April. This will change the equipment expense for that month.
This budgeting template can be used to help estimate whether or not your optometry practice is profitable on a monthly basis. Just make sure to customize the template to fit your specific practice projections. This template should help you budget in no time at all!
To download a copy of the budgeting template, please fill out the form below.
Want help customizing your budgeting template?
Optical practice size and style heavily influence actual results compared to the industry averages stated in this template. PECAA’s Business & Financial Advisors are available to work with Members to review practice-specific data and help determine potential areas of improvement as well as lay out an action plan to achieve results.
Not a PECAA Member Yet?
For more information on PECAA and how we can help benefit your practice, please contact Sara Campbell, PECAA’s Membership Manager, at Sara@pecaa.com or by calling 503.670.9200.