By Paul Surridge – Chief Executive Sight Care Group
Definition of strategy – A plan of action designed to achieve a long-term aim, plan or objective. A significant number of potentially sound businesses in all sectors fail every year because they lack a coherent strategy. Business goals and financial plans are essential ingredients to keeping a business on track, on time and within budget. Of course it’s not as simple as that, however muddling along in the blind hope that all will be well is a recipe for disaster.
The following is a very simple guide to establishing a strategy for your practice:
- Know your strengths, weaknesses, untapped opportunities, and the threats that face your business. Build on your strengths, eliminate the weaknesses, exploit the opportunities, monitor and manage the threats.
- Know your competitors’ SWOT’s.
- Understand the basics of profit and loss – what was your turnover last year? What was the cost of product as a percentage of turn-over – this will determine your gross profit? What did your overheads represent as a percentage of turn-over? What was the % bottom line profit before tax after deducting salaries etc. Everything in business has a financial marker, and should form a part of your KPIs in the planning process. Drive top line sales and spend too much on product and this will affect your GP. Spend too much on overheads and this will deflate bottom line profits. The expression ‘turnover is vanity, profit is sanity’ has resonance.
- Set your financial targets for the year ahead aiming for an increase in turn-over that should stretch the business, however targets should be attainable; it’s pointless setting targets that sound attractive, but have little prospect of achievement. Of course, you’ll need to ensure you can achieve the increase in turnover closely managing costs.
- Consider where the additional business will come from. Existing patients or new patients? The reality is that it will come from both, but where should you place the emphasis?
- Determine how that additional business will be achieved; what marketing, PR, promotional tactics will you have to employ throughout the year to achieve your aims. What should it cost as a percentage of turn-over?
- Who will undertake the tasks that need to be performed and what reporting procedures should be in place to measure effectiveness?
Doing this stuff is not easy at first, but once you’ve mastered the basics you’ll start to see positive measurable results, and you never know you may enjoy it. Having a plan is not enough, it needs executing. It’s a team effort so get everyone involved and motivated to do their bit.