FEATURE BUSINESS DEVELOPMENT BUSINESS PLANNING 101 Time to put on your business hat and get acquainted with the financial side of your practice BY BRIAN SHUMAK Y ou spent many years learning about the human body, what makes it tick and how to help people feel better. You graduated. Then, suddenly, you are no longer just a doctor of chiropractic, you are also an entrepre-neur – an accidental business owner. Whether you are a one-person opera-tion, owner of a clinic or owner of a number of clinics, you have to learn how to be a businessperson. Not everyone is able to make that transition in a smooth manner. One of the biggest mistakes common to the vast majority of businesses is not establishing a business plan from the start. However, it is never too late to set one in motion if you have not already done so. The business plan should ad-dress more than just location; it should speak to the strategy that will be em-ployed to get the practice to a profitable position and beyond. Having enough capital does not mean you should discard the business plan. Rather, it should be-come your holy grail to success. Most businesses have to seek an injec-tion of capital from a bank or equivalent creditor at some point. A business plan will be needed to secure this capital. If you are unsure of how to set up a busi-ness plan, key the words ‘business plan template’ into Google and you will have a choice of more than 44 million. One of the simpler business plan tem-plates discusses the premise to the busi-ness, outlining its mission statement and value proposition. Then it moves to the reason that the location chosen is suited to the business and how you are going to market your business, how you intend to expand and how you will become finan-cially viable. At the end of the day, each business that succeeds will have to ad-dress the five key components to a cor-porate financial plan: cash flow manage-ment; risk management (insurance); tax planning; employee compensation and retention strategies; and succession plan-ning. CASH FLOW Cash flow management is the first com-ponent because it is also the one that impacts all of the others – as the cliché goes, “money makes the world go around.” Despite this fact, very little energy is spent on devising a cash flow management plan. A good cash plan does not involve simply keeping the BRIAN SHUMAK is president of Brian Shumak Financial Services, which specializes in financial planning for health-care practitioners and companies throughout Canada. He waives his initial consulting fee for all those who are current with their respective Colleges. Brian can be reached by email at [email protected] or by phone at 416-577-7505. 34 Canadian Chiropractor June 2014 books to provide to the accountant or Revenue Canada. A good plan involves dissecting the incoming and outgoing funds – knowing your numbers. For incoming cash, it is very important to know how that dollar walked in the door. Did it come from a referral, a concerted marketing effort or did the person simply walk by and stop in? This information would give you an indication of where to target some of your marketing dollars. If a marketing campaign generated 30 per cent of your revenue that year and only cost two per cent of your expenses, that would be great. If, however, a mar-keting campaign that was responsible for 30 per cent of your expenses generated a two per cent rate of return, it would likely be one not to repeat. By knowing your numbers, you are able to best target that which is profitable and eliminate that which is not. Moreo-ver, if there is a sudden decrease or in-crease in business, knowing your num-bers will allow you to zero in on the cause, and either change it or repeat it. With that in mind, it behooves a chi-ropractor to ensure that the maximum amount of money is being generated for the lowest amount of expenditures. In her book Spent , Stephanie Holmes-Win-ton introduces a cash flow management structure that she applies to personal money management but can also be used corporately. The two types of cash flow www.canadianchiropractor.ca
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