You go to a CPD session and return back to work full of enthusiasm and a hundred ideas. But as the first day back progresses, your priorities rapidly change from what were very important strategic issues, to the knee jerk issues present in front of you right now – the complaining client, the staff member that has taken sick leave, the computers that are not working…..and so it goes that all the great ideas you had while you had a clear head away from work are forgotten and replaced by the day to day issues that do need addressing but have very little long term value.
Does that sound familiar? Every business owner has this challenge. So how do you go about making sure that the long term, profit generating things actually happen and do not get overcome by the day to day grind?
Here are some tips and tricks to making sure that your ideas happen:
1. Don’t have too many ideas: This is a common problem where you may have hundreds of ideas and want to get them all working. The end result is that none of them actually come to fruition because it takes work to implement each one as well as getting your entire team behind the idea. We think that for a year implementing 4 fantastic ideas is a lot better than trying to implement 20 good ideas. Four is a great number, one for each quarter of the year.
2. Choose your business strategies carefully: So you have 20 ideas, and you need to choose the 4 best ones, how do you go about that? There is a process that can be applied to this quite easily so that you can assess the financial benefits and effort required for each idea. Let’s take 2 extreme situations and compare the idea of selling more pet food vs doing more dental procedures.
If your practice sells $20,000 per vet per year in pet food then you could try to double that and sell $40,000 per vet. In a large practice his could bring in significant revenue, but how much is profit? Pet food has a relatively low mark up so at 30% markup this would make you an additional $6,000 profit per vet.
If you have an average dentistry performance at the clinic then your vets will be performing 1-2 dentals a week which is roughly about 70 dentals per vet per year. The average invoice total across all the grades of dental procedures is about $900. We also know that some practices perform double the national average dental procedures, but lets not be too fussy and accept that our team may only get half way there – an additional 35 dentals per vet per year. This would generate an additional $31,500 per vet in revenue, but how much is profit? Assuming that you do not have to employ more staff to get this work done, then the remaining overheads in a veterinary practice for this procedure are very low leaving about 80% as profit. That’s $25,200 extra profit per vet.
We can see from this that increasing dentistry would be a better strategy than selling more pet food. The take home message being that you have to select your 4 best ideas based on some kind of logic and measurement.
3. Write your chosen ideas down: Write it somewhere where you will be able to see it so that you don’t forget the goals you set out to achieve for the year. Also make some notes and simple steps as to who else is going to help and what needs to be put into place to get this idea to work. For our dentistry example it might be:
-Have a team meeting
-Get an external trainer to do an in house dental workshop
-Identify our vets that are booking in the most dentals and get them to train the other vets to replicate their consulting room technique for this condition.
– Track the number of dentals each vet is doing so that you can monitor improvements
4. Don’t try to do it all at once: So now you have eliminated most of your ideas and will stick to just the 4 best ones for the year. Don’t make the mistake of trying to get your team behind all 4 ideas in one go. The year is nicely split up into 4 quarters (3 month chunks) and this is a nice time for your team to learn new behaviour AND allow it to become a habit in the practice. Implement your highest value idea first and your lowest valued one in the last quarter of the year. This allows your team to get trained up and accustomed to the new routine.
5. Track and measure if your ideas are working in the simplest manner possible: There is no point putting time and effort into implementing something and then having no idea whether it worked or not. Doing this would mean that you make the same mistakes again and again. If the steps for implementing better dental care were followed but the number of dentals does not increase, change the way you tried to do it and discuss with your team why it did not work. It may be something as simple as the dental equipment needing updating which is an easy fix. Or there may be deeper seated belief issues where some of the team do not believe in performing grade one dentals – this would involve some cultural re-aligning of your team which is hard, but well worth while for your business to progress to a higher level.
Putting some structure to your strategic implementation will allow your business to consistently move forwards in profitability, better paid teams and the standard of care offered to pets – it’s a win for everyone.
Article written by Paolo Lencioni BVSc DipCAP MPA.
Paolo is Director, Senior Accountant, Software Project Manager at APL Accountants and Director at Profit Diagnostix.
APL Accountants. Tel: 07 34880131. https://aplaccountants.com.au/
Profit Diagnostix. https://profitdiagnostix.com/