PracticalDermatology

With today’s high inflation, financial discipline within your business is exceedingly important for both short-term and long-term success. Not unlike a diet or exercise regimen, committing to financial discipline is tough and will have its ups and downs. However, if you can stay the course, you will likely see promising results. With that in mind, let’s explore what that financial regime might look like.

Establish a Baseline

Have you ever heard the expression, “begin at the beginning”? In the case of financial discipline, the process starts by identifying your current fiscal landscape. This is done through two essential documents: your profit and loss (P&L) statement and balance sheet.

The P&L outlines your revenue, business expenses, and resulting operating income. People are often enamored with the top line revenue figure as it’s sexier but be mindful of the bottom line. It’s a much smaller number, but those are the funds used to pay yourself as an owner, pay down debt, reinvest in the business, or save. If you’re hypothetically making pennies on every dollar generated, that can be great fuel to improve your financial discipline.

The second document, your balance sheet, is critical in helping you understand what you own (e.g., savings, inventory, equipment) and what you owe (e.g., credit cards, loans) at a specific point in time. Leveraging this data can help you make educated decisions for the practice and plan for the short- and long-term. Let’s consider the following scenario: Your practice has recently expanded and added several new personnel. With those new investments, is it the best time to buy more equipment? Maybe, or perhaps you table those purchases until later when your new expenses can be measured against the new revenue they are generating. Knowing what you owe and own, can help you determine what decisions to pursue and when.

Set Goals

Now that you have a grasp on your practice’s financial situation, here comes the fun part: setting goals. When engaging in goal setting, consider making SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) goals. While it’s not the only format you can follow, the pillars of SMART goals can help you come up with detailed, thoughtful objectives.

For instance, maybe you want to grow your top line by 25% in the next 12 months. This hypothetical goal already has some SMART parameters: measurable and time-bound, but it’s lacking in specificity. Your SMART goal should specify how you will reach your aim. For instance, what actions need to happen and when? Who will be responsible for those actions? With those considerations in mind, you can then assess whether your goal is achievable. Is a 25% increase too aggressive—or not aggressive enough—given current manpower and capacity? Also, how is this goal relevant to the practice? Is this revenue needed to advance the practice’s mission, vision, or strategic initiatives?

To help answer these questions, don’t be afraid to reach out to others. You’re not on an island when creating goals. Consider seeking the opinions and advice of others, including your team, as they will be paramount in making any goal a reality.

Implement

Since your SMART goals outline specifics and timelines, they basically serve as your plan. With your roadmap in hand, it’s time to implement.

Implementation will likely include communicating the final plan to your team. As I mentioned earlier, your team will be the ones helping you achieve your goals, so they should be briefed on them. This provides your staff an opportunity to understand your goals, ask questions, and request needed tools and resources. It also gives you an opportunity to explain your “why” to help them understand where you’re coming from as a business leader and to encourage their participation.

During rollout, remember things might not go according to plan. The predications and assumptions you used to create your plan won’t necessarily be the realities you encounter. That’s OK. The important takeaway is to be flexible when the plan doesn’t unfold as you envisioned. In those unforeseen moments, be sure to re-evaluate and pivot your approach to keep moving forward.

Measure

Peter F. Drucker, management consultant and author, is known for this phrase: “You can’t manage what you don’t measure.” Keep this in mind as you rollout your plan and have the discipline to measure on a regular frequency, perhaps weekly or monthly.

Based on the schedule you choose, it’s suggested to have a similar check-in frequency with your team. That gives you an opportunity to ensure staff members are aware of their progress, the distance left to achieve the goal, and that you’re available to help support them in getting to the finish line. It also provides a venue to remind the team of your “why”—why this goal is important and beneficial to practice—should they need a reminder to stay motivated.

In a team environment, a common time window to share goal progress are Monday mornings when patient flow can be lighter and there’s room to fine tune the achievement approach in the week ahead. Whether it’s every Monday—or a different day—having a regular team huddle to review metrics, priorities, etc. is incredibility helpful in understanding where you stand.

Inspect

My favorite phrase is “inspect what you expect.” It pertains to follow-up—be it a business plan, a sales goal, or even your kids brushing their teeth! Basically, if you’re expecting a certain result, you need to look into the matter to make sure that result was realized.

Measuring your progress (as noted above) certainly helps toward this effort. And during your inspection, don’t shy away from real-time inquiries and encourage your team to do the same. This could mean inventory checks, marketing and online reviews, secret shopping your practice, or other follow-up activities. The key takeaway is to check-in.

John Wooden, arguably the greatest basketball coach of all time, said: “It’s the little details that are vital. Little things make big things happen.” So, pay attention to the small details—inspect and investigate them—to make your big goals happen.

An Ongoing Journey

Whatever your financial goals may be, you can’t get there if you don’t know where you’re starting from, so begin at the beginning. From there, use your data to set goals, implement your plan, and exercise discipline in measuring and inspecting results to reach your end goal. When you’ve hopefully met your goals, rinse and repeat this process, as the financial discipline journey never ends!