Nearly twenty years ago, the Brakke Study identified characteristics of successful practice owners. A key finding from the study was this: veterinarians who scored higher in financial acumen, and who owned or worked in clinics applying a larger number of standard business and service practices, had higher average incomes than those who did not. One of those factors was review of financial statements. You may have no idea what these numbers mean at first, but over time and with practice, you will learn what numbers must be managed. It's much more than merely looking at the financials. The secret is knowing what the numbers mean. Those veterinarians surveyed 20 years ago were no different than you are. They didn't graduate from veterinary school thinking, "I can't wait to read my first balance sheet!" Over time, they learned what the numbers meant, which ones are important and what can be done to make them better. They didn't become accountants. They worked with their veterinary accountants and advisors to understand how they could make a positive impact on their businesses.
Whether you are reading this in April or another part of the year, it's time to take a look at where you are and where you want to be. Start with a review of your financial statements and compare the first quarter of this year with the first quarter of last year. It's important to look at a representative time frame. Since much of veterinary practice is seasonal, it doesn't always make sense to compare the current month or quarter to the previous period. Instead, compare this March to last March, or the first quarter of this year with the first quarter of last year. Look at expenses as a percentage of total revenue, and concentrate on your practice's biggest expenses. What are they? Payroll for doctors and staff and Cost of Goods Sold. If you have been a subscriber to our newsletter for long, you know that it isn't worth your time to hunt down the best price for copy paper until your biggest costs are well-controlled. Instead, pay attention to the costs that will make the most difference to your bottom line.
Once you are finished with the financial statements, review production reports by doctor and for the practice as a whole. Evaluate production in dollars as well as production by category for each doctor, and notice the differences. Do any of the doctors out-produce the owner? Or does the owner lead the pack? When you compare doctors, build in differences in case load and hours worked. What stands out? Include factors that are harder to quantify, like whether records are complete, if calls are returned promptly and how eager staff members are to work with each doctor.
Then, with spring weather taking hold in most parts of the country, it's time to look around the outside of your practice. When the weather is bleak and you start work before sunrise and leave after sunset, it's easy to miss small clean-up projects that would make your practice more appealing. During slow times, assign staff members to minor maintenance tasks like pulling weeds, litter patrol, or oiling the hinges on the gate. Remember that clients can't evaluate the quality of medicine you provide, so they will base their opinion of your practice on peripheral factors, including the length of their wait, whether the chairs were comfortable and whether the fence is in good repair. We aren't saying that clients are superficial! We are saying that many things we take as a given, like your passion for veterinary medicine, are not as obvious to our clients.
If you made goals for the year, now is the perfect time to review your progress. Are you where you expected to be? If you are, good for you!! If not, why not? No blame game here. Just figure out what got in the way of achieving your goals. It isn't unusual for goals to take longer to reach than you planned. Don't get discouraged; get back on track!