The management of the finances of a business / organisation in order to achieve financial objectives is called financial management. The key objectives of financial management are to create wealth, generate cash and provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested.There are three key elements to the process of financial management:
The goals of financial planning are to maintain credit, balance income and debts and last but not the least is to plan for savings and retirement. You begin your practice either by establishing your own set-up or buying an already set up clinic. Borrowing is inevitable at this point in time. A good financial planning is must for the success of your practice. Identify your needs and resources before you take any loan. Ensure the following requirements.
Calculate and estimate the requisite amount that you need to borrow. Next, identify the sources of financing.
Once the loan is approved you need to allocate the funds intelligently. These should take care of not only the overhead expenses of running the dental practice (which include equipments, supplies and purchases) but also include compensation for personnel.
While applying for the loan you need to cover the purchase of the practice itself, along with equipments, supplies and operational costs till the time the practice generates sufficient income.
Once you have finalized your decision of setting up a dental practice- you need to develop a good business plan. This is your vital referral guide.A good business plan essentially has three parts:
To develop a business plan seek assistance from the lenders or business personnel or some other health related business.
A proper documentation of the loan is crucial. This contains the following documents:
The loan summary gives the lender cursory details about the loan request. This includes the use of funds for dental instruments, material expenditure, operating capital, first year cash projections etc.
This would include an auto biographical sketch that would range from the academics to the work experience that you have gathered. You may highlight the points like any service to military or voluntary government organizations, management or supervisory experience to highlight the additional qualities in you as a good manager and leader.
Analyze your values, beliefs and principles with respect to practice of dentistry and objectives of what you desire your practice to be.
Justify your choice for the practice location.You may also describe other health services in the vicinity, how many dental practices are there in the chosen locality, etc. Provide demographic details of the location.
These are the estimates of your expenses for the next year. This is an estimate that would be based on the number of patients that you expect to see each month, multiplied by the average fee per visit. Expenses would be based on your research that you find out from the dentists in locality and from the previous practitioner (if you are buying the practice). The expenditure heads should be classified under proper categories of practice. The combination of the monthly projections would then give you your annual projection.
In the beginning of your practice the expenditure may be greater than the income. There should be an initial working capital to sustain the practice before the patient inflow grows and thus the practice income makes the practice self sufficient and profitable. The working costs involve the salaries of the staff, replenishing the materials, maintenance of dental operatory, etc.
You may have to get yourself and your practice insured in order to protect the lender and your property in circumstances of your death or disability in the period of outstanding loan.
You need to select the lender with careful assessment and pay attention to all the terms and conditions of the loan. Also consider the lender's experience in the market and the history of the lender.
Certified professionals like financial advisors/planners and accountants may provide you help with the planning and budgeting. Get advice on the insurance of the practice. Certain banks also provide general information on financial planning. You may approach a practitioner with a good planned practice for drawing up the expenditure plan.