Client trainingVisited 0 of 32 modulesBudget and the annual plan
A budget is the year written down before it happens, so that every month can be read against it. After this module you can build one from the drivers of the clinic rather than last year plus five percent, read a budget versus actual report, and know which variances matter.
Build it from drivers, not from last year
"Last year plus 5 percent" is not a plan; it is a hope with a spreadsheet. A driver based budget starts from the things you control and computes revenue from them:
| Driver | Harbor Aesthetics, plan | Where it comes from |
|---|---|---|
| Provider scheduled hours a month | 380 | The template (Operations 2) |
| Utilization | 78% | Last six months' trend plus the evening blocks |
| Revenue per booked hour | $520 | Last six months, plus the September price change |
| Service revenue a month | $154,000 | 380 x 78% x $520 |
| Retail attachment and average retail ticket | 30% x $95 | Scorecard |
| Members and monthly fee | 150 x $149 | Membership plan (Operations 6) |
| Total revenue a month | $185,000 | Service plus retail plus membership |
Then the costs, each tied to its driver: product at the treatment margin from the unit table (Finance 7), provider pay from the plans (Finance 8), the desk from visits per day, marketing from the cost per new patient you are targeting times the new patients you need, and the fixed lines (rent, software, insurance) from the contracts. Seasonality by month from the last two years. The result is twelve columns that a P&L can be laid next to.
The three scenarios
Build the plan once, then change three drivers to make a low case and a high case: utilization five points either way, the membership count, and the cost per new patient. The low case is the one to fund: cash runway (Finance 9) has to survive it. The high case is the one that tells you when the next hire is affordable (Finance 8). The plan is the one the targets on the scorecard come from.
Budget versus actual
From the third month with Benchmark, the package includes a column for the plan next to the actual, with the variance in dollars and percent. Most lines will be off; the point is to know which ones matter.
| Line | Plan | Actual | Variance | Read |
|---|---|---|---|---|
| Service revenue | 154,000 | 147,200 | (6,800) (4.4%) | Utilization 74% not 78%. Two open Thursday evenings. Fix: the recall list. |
| Product cost | 42,400 | 44,900 | 2,500 (5.9%) | Margin down 1.5 points. Supplier increase not yet repriced. Fix: Finance 7. |
| Marketing | 12,000 | 11,400 | (600) | Under plan and new patients on target. Fine. |
| Rent | 8,000 | 8,000 | 0 | Fixed. Never a variance worth reading. |
| Software | 1,900 | 2,600 | 700 (37%) | Two new subscriptions nobody approved. Fix: Finance 6. |
When the plan changes
A plan is rebuilt when a driver changes for a reason, not when a month misses. A new provider, a price change, a lease renewal, a new location: rebuild. A slow February: read it against the seasonality you already put in, and hold. Owners who rebudget every month are chasing the actuals; owners who never rebudget are reading against fiction by June. Quarterly review, annual rebuild.
Try it yourself
A driver based revenue budget starts from
Last year plus a percentageScheduled hours, utilization and revenue per booked hourThe marketing budgetThe scenario to fund cash against is
The planThe low caseThe high caseSoftware is 37% over plan ($700); service revenue is 4% under ($6,800). Read first
Software, the percent is biggerRevenue, the dollars are bigger and it is the driverNeitherThe budget is rebuilt when
Any month missesA driver changes for a reason: a hire, a price change, a lease, a locationNeverBudget versus actual appears in the package from
Month oneMonth three, once there is a baselineYear end