What you know + what you project = your budget

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Take the mystery out of budget planning.

When you create a budget, you're simply making an educated guess about the practice's financial situation and planning for future revenue and spending. You start with what you know (revenue and expenses from this year), then account for any changes you expect next year to bring.

For instance, if you plan to implement your medical standards of care more consistently, revenue will grow with the improved compliance. What happens if you don't hit your targets? Simply identify the reason as best you can, update your budget, and keep up the good work.

Take a look at these statistics from Benchmarks 2009: A Study of Well-Managed Practices by Wutchiett Tumblin and Associates and Veterinary Economics to help you budget for the future.

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But don't stop there: After setting your budget for the year, take a look at what you must do to implement the changes your budget requires. Focus on expenses that are considerably higher than Benchmarks targets. Tackle these first, and you'll see a significant improvement in your bottom line.

Keep in mind that the main reason budgets fail is that the bar is set too high. Pick two or three expenses and bring them down, then move on to two or three more. And be sure to monitor your progress so you can see how far you've come.

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