business Life Cycle Management
WHAT Is a Budget?
A Budget is a plan that outlines an organization’s financial and operational goals. It may be thought of as an action plan for the future. Planning a budget helps a business allocate resources, evaluate performance, and formulate plans. Its main use is to predict your practice’s ability to take in more cash than it pays out.
Budgeting is the periodic review of past financial information with the purpose of estimating future financial conditions and creating a fiscal plan that can then be managed to for a specific period of time.
In order for your practice to achieve maximum success, dependable budgets are necessary for sound planning. Budgets help to define and predict production and revenue information and dollar requirements for areas such as labor (hiring, raises, etc.), clerical and clinical supplies, laboratory costs, rent or mortgage expenses, capital expenses (equipment and maintenance, etc.), communications, administration, marketing, the development of new products and services and/or changes proposed for existing products or services, leasehold improvements and servicing debt
- Many doctors are comfortable with status quo and see no value in spending time preparing budgets.
- Owners accept fate and hope for the best.
- Owners lack the expertise necessary to prepare a budget.
- Someone tells the owner/doctor that budgets will not be necessary.
Business owners need to carefully analyze how their actions (price setting for services, purchasing supplies and equipment, hiring employees, etc.) might impact profit before making final decisions. Understand that each decision carries numerous ancillary consequences with it.