The 2023 financial year came to an end some time ago. And the financial world will tell you should (and need) to plan for 2024. I am no different although the way I will tell you to plan for 2024 will be a bit different from other accountants. And I will also say you don’t do a plan for a year. Which is why you are getting this advice way after July 2023.
That’s because most accountants will teach you to do things that in theory is true and make sense. Except we do not live in a theoretical world – we live a practical world so I will tell you to operate practically not necessary what is great in theory.
And generally, medical professionals rarely do what their accountants tell them. Just as rarely as patients following a GP advice on losing weight and knocking out the sugar.
Let me put it this way. In theory we all know we should eat less and exercise more. In practice we will stuff our mouths until our tummies explode. And then we will pretended we have exercised by walking to the convenience store to buy a tub of ice cream.
See what I mean.
So, this article is basically how you can eat enough to be full and not over indulge on the ice cream. This is because I know you are never going to follow the route to obtain a six pack.
1. Don’t bother with a budget – but be clear on what you need money for
I have found budgets never work really. I have tried them. My medical clients have tried them and the grand total of success is ….. drum roll…….. NIL. Yep never I ever seen a budget agree with reality.
And I have never seen a medical professional look at them fondly or with excitement.
I can see the reluctance. Why plan for something that is never going to be achieved.
Budgets work perfectly in a theory world, but never in a practical world.
But you need something to keep you on track. So this is what I do.
Every week,
- I add up the money that comes into my bank account. I take out a % to pay for my BAS and transfer to a separate Tax account
- I work out the withholding tax & Superannuation for all wages and transfer that to a separate tax account too.
- I have a % figure which is my profit and I take that out too, I pay myself first.
- Whatever is left I know I can spend on my business – if I need to spend more than what is in the account I have a spending issue or need to generate more income than what I am currently generating. It is relatively easy to plan for regular costs such as wages, rent etc. The rest you know you can spend of ad hoc stuff if you need to.
If you stick to this the chances are
1. You will always have money to pay the taxman.
2. The profits you wanted to make is transferred out before spending.
3. You can easily work out what you are spending your money on and knock out unnecessary expenses because if you do not you run out of money. This makes you look into spending and forces you to budget your spending.
2. Have a max of 5 goals
I would not set more than 5 goals. One should be fee income/ service injcome you want to achieve monthly. Set a goal for profits monthly too. The other 3 could be whatever you want (new patients, room utilisation rates etc).
Then for every goal state an action that needs to take place in the next 90 days to help achieve that goal. After 90 days you may decide another action point or continue with what you were doing.
3. A 2 page plan
I have seen some serious business plans in my career. I have usually found that are in pristine condition often bound and printed. If it is still in pristine condition after 3 months then you know it has not been opened since it was prepared. A business plan should be falling apart if printed as it has been used, checked and read so many times.
I appreciate we now keep plans on the cloud and this rarely crumbles but you get my point. Most are never used because they are complex, long winded and downright boring. But a simple 2 page plan can do wonders.
It needs to be simple:
• What is your mission?
• What is the business’s vision?
• What are our core values?
• What are our 5 goals?
• What are we going to do in next 90 days to meet our goals
That’s it. There are entire business books written on business plans but as I said it works in theory but rarely in practice.
So, if you want to really move in 2024 this is the way to do it. Everything else is just theory, noise and well BS.
4. Meet with Your Accountant!
Yeah I get it. Sitting with a boring grey accountant can’t be fun. But find one who is not and then see what happens. Because the good ones will help you work less, earn more and become wealthy. It is after all what thousands of medical professionals have told us they want. You probably want it too.
But if you want them to help you do that then they need to know you, understand you but more importantly they need to meet with you regularly.
Let me put it to you this way. If you are serious about becoming fit do you go to the gym once a year do a 1 hour work out and say you are fit for a year? You know that is not going to work.
In the same way if you want to work less, earn more and become wealthy you are not going to get there if you see your accountant once or twice a year.
