Game Changers - Profit Planning

Leading practices understand that profit is the life blood of their practice. It is what enables them to improve and innovate, attract and retain talent, and earn a reasonable return on their investment and risk. Profit, or the lack thereof, is a huge Game Changer. Profit is particularly important during challenging times of change, such as we find ourselves in now, because it enables options and choice in responding to new challenges.

Profit is the ultimate measure of a practices relevance, service, knowledge, judgment, skill, discipline and planning. Profit is too important to leave to chance. To be optimized profit must be planned.

Too often practice owners and managers think of profit as something that is leftover rather than built in. When that is one’s perspective, performance always falls short of potential. It’s amazing how many practices operate without a coherent strategy or financial plan. Its startling how few practice owners and managers even know their intended and actual profitability.

Profit begins with planning.

Planning involves establishing expectations, positioning operations for success, managing behaviors, and delivering results.

So what factors into planning?

Most practices define expenses first, then chase revenue with hopes of achieving a profit. Leaders use a different approach – they define intended profit and realistic revenue first and then manage expense within predetermined constraints. Doing so empowers them to manage by making disciplined decisions.

Capitalization, equity, debt, credit, cash flow, pricing, contracts, and collections are obviously important factors. Then there are labor considerations including staff levels, mix, assignments, compensation, training,  and productivity. Facility related matters are also part of the plan – location, size, design, and occupancy expense. Operational factors such as policy, procedure, workflow, offerings, services, utilization, communications, and marketing are also critical. Each factor has its own impact but together the impact can be exponential. These are just some of the big rocks.

Other factors involve performance history, competition, vision, market changes, and comparative performance benchmarks.

Every factor and every decision either enhances or diminishes potential profitability.Whether one earns a profit or not is simply a matter of choice!

Leading practices are Game Changers for their competitors.  Through profit planning Leaders strengthen their positions, their choices, their influence, and their advantage. They set the pace and widen the lead. They do so at their competitors expense. They do so to their community's benefit. That’s what makes them leaders. It begins with intent, commitment and planning. Profit follows…

Profit planning has never been more important than it is today. A growing market and eroding reimbursement demands innovation and profitability to implement it. It’s not just about surviving it’s about thriving.

There is nothing more strategically important or financially rewarding than Profit Planning! It’s impact is immediate.


You’ll be surprised by its potential.


“Profitability is not the purpose of, but a limiting factor on, business enterprise and business activity. Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity”. – Peter Drucker

All The Best!

Bob

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Performance Builders