A SatNav guide to your practice’s future
The point of a business forecast is to identify how the business could, or should, develop over the short, medium and longer term, setting goals based on its current standing.
It tells you the direction your practice needs to take to reach its ultimate, optimum goal of maximising efficiency and profits within the framework you have chosen.
Typically forecasts are made at the close of a financial period, using a constructive analysis of likely events in the economy generally, the relevant industry sector, and the specific characteristics of the business itself.
The first questions relate to possible changes in the volume of trading, and for a dental practice this means assessing PCT contracts, whether investment in new equipment is likely to increase patient throughput, and whether changes to the practice’s modus operandi (longer opening hours, for example) would be justified to increase turnover and profitability.
The present fixed costs of rent/mortgage, salaries, utilities, essential materials etc, also form part of the forecast. By setting monthly targets and comparing performance to the predicted outcome, it’s possible to accurately monitor progress and make timely corrections when necessary.
For new businesses most fixed costs will be known at start up, and as the business grows performance can be measured against predicted targets. Bank managers are understandably keen on business forecasts when start up lending is involved!
An annual update is recommended to take account of changed circumstances and actual performance. Without a forecast comparison, your practice could gradually lose turnover without you realising the gravity of the situation until it was too late.
Perhaps the most valuable aspect of a business forecast is enabling future planning. Being able to see ahead means that contingencies can be in place if storms appear on the horizon, and when the economic forecast is benign your practice can confidently aspire towards the ‘sunlit uplands’ from a sound foundation.
Practice development director, Claire Bennett, joined Lansdell & Rose in January 2013. She is a qualified accountant with a background in healthcare but uses her knowledge of the industry to ensure Lansdell & Rose continues to develop its client offering by implementing efficient systems, growing the team and establishing new professional contacts who can also assist our clients. She also is responsible for our own marketing so we as a business can continue to grow.
For more information, visit www.lansdellrose.co.uk or call Lansdell & Rose on 020 7376 9333.