Trimming the Fat
Trimming the Fat
Smart Steps to Trimming the Fat Out of Your Practice
We are not here to talk about how best to trim fat from a brisket before smoking, healthy ways to cut extra fat out of your diet or even Dave Ramsey’s 24 ways to reduce personal spending. These are five recommended steps for trimming the extra expenses out of your practice:
1) Start with your practice goals and priorities. As the practice leader, you must clearly establish practice goals and priorities in order to distinguish between the necessary and unnecessary expenses. To be fiscally responsible, you must measure how each cost will help the organization meet its goals.
2) Establish a budget and review regularly. Just looking at your bank balance going up or down does not give you a sense of where the money is going. Rather than create a story about what may have happened, compare your actual revenue and expenses to a budget. During a monthly budget, you can identify opportunities and make immediate adjustments to spending. On an annual basis, you can analyze areas for larger cost savings.
3) Audit your subscriptions. Your practice requires that you outsource many services including accounting, marketing, security and technology. One of the quickest ways to trim the fat is to double-check subscriptions and packages to ensure you aren’t paying for more than you’re using.
4) Prioritize profitability. Have a clear understanding of what makes your practice profitable and use financial data to analyze the ROI (Return On Investment) for any large costs or project. You may find that a pet project of yours is appealing, but just does not provide the profitability for continued investment.
5) Invest wisely instead of slashing costs. The time to trim the fat is when you have plenty of money in the bank. If you wait until the bank account is low, you are like the starving person at the grocery store who buys too much of the wrong food just out of desperate hunger. Be strategic in your cost cutting by eliminating the costs that are unnecessary, but continue to spend on resources that are necessary to keep the practice growing and profitable.
Please do not hesitate to contact JNG Advisors to see how we can help you establish annual budgets and analyze the ROI on your practice.