Become a budget building whiz—really!

Become a budget building whiz—really!

Practice manager by day, accounting wizard by night. Or so they’ll think. Trick your boss into thinking you actually know what you’re doing by building a budget for your veterinary practice in five minutes. No, really!
Jan 11, 2018

Photo: The dreaded day has come: Your boss has told you to build a budget for the veterinary practice. You quickly wonder how you’re going to make this happen—after all, you’re a practice manager, not an accounting wizard.

That is how I used to feel until my accountant paid a quick visit last week. She showed me an easy trick using actual historical data to build next year’s budget. She did it in five minutes! Then all I had to do was tweak the numbers and voila, next year’s budget!

To do anything well, it helps to believe in what you’re doing. We train our team so they can believe in the medical care they offer our patients. Financials are no different. We need to understand what we’re doing and why it’s important. Some of my questions were:

> What’s the purpose of a budget?

> How can we have a budget when we can’t really control the flow of our business?

> We just spend what we need to when we need to. How can we budget for that?

The purpose of a budget is to have an idea of what you will need to do over the next year to improve your business (and yes, an animal hospital is a business). A budget allows you to look at what you’ve done in the past to forecast the future.

Budgeting is also a tool for you to look at different areas and set targets for improvement. Once you understand where you need to do better, you can focus your efforts there. For example, your budget shows you that your revenue is historically down in September when kids are returning to school. You may decide to do additional training or encourage vacations or you may want to focus your advertising efforts for new clients during that time. We don’t have to spend our time dodging bullets. We can help determine the direction we want our hospital to go.

I use QuickBooks, which provides a quick and easy way to create a budget. Be careful, your boss may think you’re an accounting wizard! If you use QuickBooks, too, simply follow these steps:

> Select the “Company” tab from the menu

> Select “Planning & Budgeting”

> Select “Setup Budgets”

> “Begin by specifying the year and type for the new budget” Enter the budget year

> “Choose the budget type” For me, this was “Profit and Loss (reflects all activity for the year)”

> “Additional Profit and Loss Budget Criteria” For me, this was “No additional criteria”

> “Choose how you want to create a budget” For me, this was “Create budget from previous year’s actual data”

Your budget will appear. Now you can increase or decrease the numbers, depending on your expectations. For this year, I increased all my numbers by 10 percent. Fair warning, it may take a little time to adjust the numbers, and you may want to review them with your boss before making changes.

One nice aspect of this software is that you can adjust your numbers throughout the year if you need to. I’m sure you’re well aware that nothing in our field is constant. Because things are changing all the time, it’s nice to be able to adjust the budget as needed—just change the number and save it. For example, if you hire a new employee, you can increase your expected payroll for the remainder of the year. Your budget changes with you.

You don’t have to use QuickBooks to take the fear out of building a budget. Use the same logic by putting together last year’s numbers, adding and subtracting where you feel a change is needed, and again, voila! The most important function of building a budget is keeping track of where your money goes. Whether you use software such as QuickBooks, practice management software or if you manually keep track of your books, use last year’s actual data to build your budget.

Understanding and using a budget can be easy and useful. Building a budget is no longer a daunting task. Just use your existing history copied into your budget and make any needed adjustments. Now you possess the tools to go forward into the new year. Not only will your boss appreciate your effort, you’ll be able to use the information to make your practice better.

Rebecca Rowe is practice manager at Seven Hills Pet Clinic in Loveland, Ohio, and the 2017 dvm360/VHMA Practice Manager of the Year.