December 2024
Business & Strategic Plan Correlation
The Strategic Plan represents the macro vision of the practice/business, the Business Plan is the micro level plan which ensures both are constantly aligned.
Obviously, Business Plans must be realistic, achievable and measurable.
A Business Plan will generally be comprised of two broad sections:
- Tactical: actions to ensure the business is managed properly; and
- Strategic: actions to achieve medium to longer term Strategic Plan goals
Tactical: This section is a ‘business as usual’, day-to-day management framework by which the practice continues to build on identified strengths (e.g. patient care services, revenue generation, expense containment) to ensure financial viability and support for initiatives to achieve strategic goals.
Features include:
- Expenses: budgets on a line-by-line basis (e.g. wages, insurance), based on historical experience, or by ‘educated guesstimate’ for start ups. Figures should be cast on a monthly basis, recognising peaks for cyclical payments made quarterly or annually. External influences such as CPI increases must also be factored in.
- Income: revenues projected for the year, based on practitioner numbers, working hours, charging rates and number of consultations/treatments. This figure should exceed expenses to ensure viability (gross/net profit).
- Measuring: tracking mechanisms are vital to ensure performance is on track……or requires some adjustment to achieve targeted end-of-year goals. Monitoring is achieved through pre-planned measurement factors that staff and practitioners agree to:
- KPIs (key performance indicators): performance rates (e.g. 90% patient satisfaction, patient numbers);
- Benchmarking various ratios (e.g. salaries to expense, income-to-expense) to industry norms to ensure practice competitiveness;
- Tracking systems which measure performance to targets, including ‘variation explanations’. Better than budget performance is a good way to understand the practice’s strengths (and continue doing more of it). A poorer than budget outcome presents an opportunity to analyse problems and remedy them.
- Non financial: it may be necessary to adjust, or introduce new, day-to-day procedures, clinical or administration, to ensure compliance with changing business imperatives or external factors e.g. legislative changes.
- Human Resources: this vital element of any practice/business should cover plans to develop staff and practitioners, targeting ‘employer of choice’ status.
- Capital: if expansion or upgrades are planned, the amount, related cost (borrowing) and repayments should be included.
Strategic: This section is vital to the growth prospects of a practice, aimed at optimisation of new opportunities (e.g. introducing new patient services), business achievements (acquire another practice), or reputation enhancement (recognised leaders in a particular aspect).
If the Strategic Plan covers a 3-year period, Business Plans should target progressive and realistic completion of stated goals so all aspirations are successfully achieved by the end, or before, the 3 year period.
Finally, as part of the measurement/monitoring process, it is advisable to review Business Plans each quarter to ensure end-of-year tactical and strategic goals are met.
