Creating A Simple Business Budget
If you’re like most OD practice owners, the idea of creating a practice budget ranks up there with getting your first colonoscopy or spending a long weekend with an obnoxious brother-in-law. For most ODs, managing detailed spreadsheets, financial reports and business metrics just isn’t in our DNA. And if you think about it, that makes sense.
What attracted most of us to the profession likely had more to do with our love of science and the desire to help and serve others. That’s a far cry from our accountants who often sit at a cluttered desk with stacks of IRS forms and large computers screens meticulously adding and subtracting numbers all day.
While creating a budget may not get you excited, it doesn’t negate the fact that, if you own your own practice, it’s is a critical component to your business’s success. In fact, I believe it is the foundation for a healthy practice, creating the framework that supports all other financial measures in the practice.
Why We Don’t Budget
There are two fundamental reasons why we don’t budget. The first has to do with our mindset. We often don’t understand or appreciate the importance of a budget and the critical planning purpose it serves in our business. We might also believe a budget provides limited useful information, or we might just be afraid of what we’ll find out.
The second obstacle to budgeting is mechanical. That is, we simply don’t know how to do it. While we might understand fundamentally that a budget is intended to predict and plan our income and expenses, we often don’t have access to the right tools to make budgeting a simple process, therefore neglecting it.
We might just be afraid of what we’ll find out…
Why Should We Budget
- It’s what all successful companies do. Could you imagine if Amazon, Apple or Google didn’t manage with a budget? Instead, what if every engineer, software programmer, receptionist and janitor had the discretion to spend the company’s resources at free will? It’s highly likely that these companies would no longer exist today, having run out of cash long ago. The most healthy companies operate with strict financial controls giving every dollar a purpose and instructions on how it should be utilized to growth the business.
- Budgeting creates peace of mind. It might seem odd to think that something as dry as budgeting could have an impact on our emotions, but the fact is that ODs that budget often experience the most financial peace simply because they have a plan. One of the leading causes of emotional stress is money. When we create a plan for our business, we take back control, thereby reducing our anxiety.
- Budgeting improves our relationships. When we have a plan, and peace of mind, we’re just better people. We’re less grumpy with our spouses and kids, more patient with our staff and more forgiving in the grocery store line when the single mom with four kids in front of us can’t find her wallet.
There’s a fourth added bonus to budgeting that we often don’t consider. Businesses that budget are more financially healthy, and therefore have the means to be more generous. I’ve never met an OD that wouldn’t give more if they could. In all my years, I’ve never encountered a more serving profession than ours. We support many causes and charities, and when we are financially healthy, there is no doubt that we will give more. So if the first three reasons don’t convince you that budgeting is important, then consider how you might be able to increase your generosity when your business has the means to give more.
How I Budget Now
Like most of you, I didn’t budget for years for all the reasons mentioned above. Several years ago, I created a simple handwritten sheet of paper tracking my income and expenses in a very simplistic format. That led me to create The Simple Budget, and spreadsheet that I use every month to project my income and expenses. I now share this spreadsheet with my coaching clients to provide them with structure to make sure they are not only projecting for the future, but also taking a backwards glimpse at where they have been. By greatly simplifying the process, I can now create a budget in less than 10 minutes a month that provides valuable insight into where the money is going in my practice. Without it, I would surely be financially lost.
Budgeting isn’t fun, but it’s a critical part of what successful businesses do. Trying to run your business without a plan leads to frustration, stress and anxiety for the owner, and worse, can jeopardize your long term viability as a company. Take the time now to reconsider how a budget should fit into your business strategy.
If you are interested in downloading The Simple Budget for your own use, simply go to impactod.com/business-tools and download a free copy. Let me know what you think. I’m always looking for ways to make it easier, more efficient and less burdensome.