The days of your accountant simply acting as a ‘bean counter’ are gone. Today’s accountant has reframed his role to encompass a wider remit – that of business partner, consultant and sounding board. You can rely on today’s proactive accountant to help you define your personal goals, then help you develop business goals which serve you personally. In my experience, this involves the following three step process.
1.Setting your personal goals
Setting your personal goals isn’t directly about your dental practice but determines what you need from it. So what do you want from life? This question encompasses:
? Your family goals
? Your retirement plans
? Your financial goals
? Goals for your free time
? Your health goals
? What you want to achieve within and outside of your career
? What kind of work/life balance you want
? What your work life will consist of
The achievement of your goals may be staged over time. You need to assess what each goal is, how you will achieve
it and by when. Your accountant can and should be able to take you through the process, and they should challenge you and encourage you as they do so. If you want to get what you want from life, setting your personal goals is vital.
2.Turning accounting on its head
A proactive accountant will then take your personal goals and help you form a plan to achieve them. This effectively involves turning traditional accounting methods on their head. Consider the basic profit and loss statement: This presents the turnover of a business at the top, followed by the costs incurred in generating the sales and of the overheads involved, before revealing the level of profit the business owner has to reinvest or withdraw from the business at the bottom.
What is more use to you on a personal basis is a financial analysis which flips this format. Putting the funds you need at the top and then calculating where they are to come from.
This ‘upside down’ analysis comprises of:
? A calculation of the income you need to live on
? A calculation of the income required to achieve your personal goals
? A calculation of the income required to pay off any business borrowing
? A calculation of the profit required from your business (based on a to c)
? A calculation of the tax you will pay on the level of profit required
? A calculation of the overheads and cost of sales involved
? A calculation of the overall level of sales required
? A calculation of the financial ‘gap’ between your sales now and the level of sales required
When you consider any patient plan or NHS income you receive, you can work out what level of private income growth you require to bridge your financial gap.
3.Bridging the gap
Highlighting untapped business potential is where working with an accountant with specific dental experience benefits you. A dental accountant has developed key industry benchmarks against which they can compare yours. A dental accountant will also possess the skills to help you gauge and tap into the 10 areas of profit potential, including your patient recall rate, your new patient generation and your treatment conversion rate.
Identifying the level of untapped potential within your dental business enables your accountant to model various financial forecasts and identify the model which will bridge your financial gap.
The outcome of this exercise is clarity for you on the financial goals and action plan you need to pursue, to achieve the lifestyle you desire now and in the future.
It provides you with a springboard for improving your future financial position. For generating the additional funds you need to achieve your personal goals.