What is the most important part of running a dental practice?
Asked this question, most people would say good treatment, taking care of patients, a strong staff team or perhaps even the best equipment and facilities. Of course, they are all important and play a vital role in the life of any practice. But what underpins every single one of them, and everything else you do? Your finances.
No matter how you look at it – or how much you want to avoid it – your financial systems will be the biggest factor in whether your business succeeds or fails. You can have the best patient care in the world, but if you are unable to keep control of the money coming into and going out of your practice, you will not last for long.
Having strong financial systems in place means you can have a good idea of how much you earn every month, and how much you spend. You can’t always predict your income completely accurately, but you should have a good idea of how much it is likely to be – and how much you need it to be to cover all your costs.
It is common for business owners to look back over their accounts after the end of the financial year. This gives them an overall picture of how they have performed over the previous 12 months. However, what it doesn’t do is give them the kind of information that allows them to step in and halt any problems before they begin. What use is it to find out in April that your income began to decline slightly in September? By then, it is likely the decline will have continued and you may not be able to remember if there were any particular circumstances which caused it in the first place, so it will be much harder to address the problem.
It is far better to have strong financial systems in place which allow you to keep track of your progress throughout the year. By having an accurate, working knowledge of all aspects of your business’s financial performance, you will gain the ability to react as soon as you see an issue on the horizon – long before it hits you and your business. You will also be spared a nasty shock at the end of the financial year when your actual figures do not match up to your predictions because you will already have a good idea of the position you are likely to be in.
The same is true when it comes to completing your annual accounts and tax returns. Accountants always complain about clients who leave everything until the last possible moment, but it is not just the accountants who suffer sleepless nights as a result of this. If you only complete your accounts and tax return nine months after the end of the financial year, you are missing an important opportunity to analyse your performance as soon as the figures are available. This gives you the chance to ensure things are on track for your targets in the following year, and to correct any minor slips before they become major problems.
A strong financial system is something which is present in every successful practice. By ensuring your finances are robust, you give your business the best possible chance of success.
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