Are you frustrated by a lackluster, less than beefy bottom line?
If you’re looking for improved profits and continued growth, then controlling spend with a dental practice budget should be your first go-to.
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“Lowering expenses through cost savings, process-improvement efficiencies, and budget control mechanisms should be the foundation for profitable growth while providing valuable insight into where your hard-earned dollars flow.” Daniel M. Traub, VP of Product, Method Procurement Technologies.
Whoa, whoa, whoa…
What’s a Budget?
Budgets are a financial plan that estimates revenue and expenses over a specified period of time and are periodically evaluated and measured against to see if objectives are being met.
Simple Enough, But Do I Really Need One?
“If You Fail to Plan, You Are Planning to Fail” — Benjamin Franklin.
The answer is no. You don’t— unless you want to do better.
Let’s be honest. There’s a little bit of teenager in all of us. Unless you love finance or purchasing dental supplies, most of us would like to spend as we like, how we like. Dental offices are most often run by Doctors and Office Managers, after all, and they have bigger fish to fry and patients to take care of. Nobody wants to spend their time pouring over numbers on an excel spreadsheet.
However, gone are the days where profits just came as long as you were taking care of patients and despite your poor purchasing habits. Rising costs, stagnant or declining insurance reimbursement rates, and increased PPE requirements are just some of the challenges grossly eroding margins for a vast majority of practices.
Today, in order to optimize your outcome and improve your profits, you must first plan and then measure against that plan.
Referring to Investopedia, “A budget is basically a financial plan for a defined period, normally a year, that is known to greatly enhance the success of any financial undertaking… Corporate budgets are essential for operating at peak efficiency. Aside from earmarking resources, a budget can also aid in setting goals, measuring outcomes, and planning for contingencies.”
Budgeting is also critical to avoiding debt, enabling you to plan and prepare for big-ticket items and unexpected expenditures. Planning a budget and keeping track of how much you earn and spend doesn’t have to be a pain in the… side. Nor does it require major math skills. But it does allow you to know where your hard-earned revenue is going and gives you tighter control of your finances and, ultimately, your profits.
You’ll know how much you’ll need to fork out for things like labor, mortgage or rent, capital equipment, dental, clinical and office supplies, and laboratory costs. Budgets are key to maximizing the success of your dental practice, increasing profitability, and improving cash flow, so you can spend on larger asset purchases and continue to grow.
Best yet, by leveraging technology and transitioning to digital procurement, you can gain extra advantages, such as increased visibility on spending habits so you can improve budget accuracy and monitor spending against your budget so you can gain better spend control and stay on target.
If you haven’t yet completed a budget for next year, it may just be the perfect time to start. Additional to the above-stated benefits, controlling digitized procurement methods budgets can help you to:
- Design and implement a purchasing strategy aligned with your budget and business objectives.
- Achieve budget targets by preventing overspending with order approval procedures that warn you if the order will push you over spend thresholds
- Analyze past purchasing behaviors and patterns for more accurate budgeting
- Gain visibility on current market pricing and availability so you can drive better purchasing decision-making.
- Quickly and easily maintain more accurate financial reporting.