Richard Scarborough looks at the importance of business plans for growing your practice and how best to create one…
‘Where do you see yourself in five years?’ I believe that the answer to this should form the basis of your business plan, as it will enable you to set specific goals aligned to your long-term vision.
This is one of the key reasons a robust plan is so important for managing a successful, growing practice. It allows you to map out exactly how you are going to achieve your core goal, allow for contingencies, identify how you will measure your success and enable you to track your progress. And, what all of that means is that you can then easily prioritise what you need to be focusing on and when, making that future goal much more attainable.
Begin with your five-year vision
The first stage is to formulate your vision by asking yourself that question, ‘where do you see yourself in five years?’; what do you want your practice to look like, what kind of clinical work do you want to be doing, etc. From there you can work backwards and set milestones (I would suggest at year one and year three) of what you need to have accomplished by then in order to make that end-goal possible.
For instance, if your goal is to become a high-end implant centre, and you’re currently an NHS practice, you need to think about how you are going to make that change. So, in this instance you might consider who is actually going to do the clinical implant work – if it’s yourself, does that entail undergoing a course? If it’s not you, do you need to recruit someone? Do you need to invest in a new surgery, or can you use the existing facilities but change the opening hours to accommodate the extra service? Where do you anticipate your implant patients to come from – your existing patient base, your colleagues, or referrals from other practices?
Your goal might be more financially orientated – such as growing profits by 10%. But the same principle applies. You still need to work out where that extra money is going to come from; are you going to try and attract new patients or increase the amount of elective treatments being taken by existing patients? Are you going to offer evening and weekend appointments?
Answering these questions and pinpointing what needs to change between now and your end goal will enable you to set out stage by stage exactly how you are going to go about it – and by when. This provides a measurable journey that also allows you to put in place KPIs that ensure the whole team is working towards the same vision and prioritising the right activities at the right time.
Financial backing
Alongside the operational element of your plan showing what you are going to do, you also need a financial strand to show how you are going to fund any changes and maintain a profitable business.
If we go back to the example of the five-year goal of setting up a high-end implant centre, if you decide that you will need to undertake a clinical course, you need to consider the financial implications, such as how many days you will be out of the practice and in training and how you will replace that income. Or perhaps you will decide you can forgo that income, as there is enough cash in the business to accommodate your absence from surgery. If you’re currently doing NHS work, who will deliver the part of your contract that you would normally deliver in those days?
Either way, whatever your goal, whichever choices you have to make to get there and however you decide to finance it, these calculations all need to be made from the very beginning. Not only will this give you the reassurance that your vision can be a tangible reality, but it is also extremely important should you require any loans or investment from a bank or financial services company.
A finance lender will need to be assured of your competence in running a business, so the more forethought and evidence of financial viability you can show in a business plan, the better. Detailing your income and expenditure, and how you are going to ensure the business will be profitable is vital for gaining financial support.
Wesleyan Bank, who specialise in the dental sector, say a business plan should be presented as a blueprint for success and should contain an executive summary of your proposal. The key things they want to see are profit and loss figures, balance sheet, cash flow and an executive summary of your proposal including, if necessary, analysis of the local market and competitors.
Regularly review
Once you have created your business plan don’t consign it to a box in the corner to gather dust. Your business plan should be regularly reviewed, so at the end of each year you can analyse your budget and see how you fared financially against your forecast. If you are faring well, great, but if you’re not you need to look at why not and put steps in place to rectify the situation. The earlier you can correct a missed financial target the less opportunity there is for a gap to grow between your financial forecast and what you actually achieve.
It is not just the finances that should be evaluated, you should also look at whether you still have the same vision. Your personal circumstances, professional aspirations or the wider market may well change over time so you need to ensure your plan is still relevant.
Although a good business plan should be a robust document, it should also be flexible; a rolling programme that is regularly updated, otherwise your practice won’t grow and evolve. Once you open as an implant centre, your goal may then move towards becoming the best in your area or growing patients by a specific percentage within the first year. At the end of each year make sure that you’re asking yourself that same question, ‘where do I see myself in five years?’
Putting it into practice
This can sound daunting, but it really comes down to setting out your goal and then working backwards to see how you are going to work towards it. A set of management accounts is also helpful. If you do find the prospect of creating a plan at this level over-facing, you can always turn to third parties for support, such as your accountant or a trusted partner.
Creating a quality business plan can take time and effort, but it is well worth it. A financial lender will expect a comprehensive plan if you are approaching them for assistance. But even if you are not, having such a plan in place will give you a structured approach to growing a thriving practice.