We all have personal goals that we’d like to achieve. Perhaps it’s retire by 50, have a holiday home in Spain, a Bentley and a big family. Your aspirations might be completely different, but as a vet, medical or dental professional it’s likely that your business and personal goals are partly aligned.
And it is equally important to be planning your personal finances as your business finances.
Financial Planning is an ongoing process which encompasses all aspects of looking after your money to meet a set of goals. It’s about defining your targets, choosing how to spend, save or invest your money to meet those, and monitoring that against your plan.
Why financial planning is important
You’re a busy professional, and finding the time to keep on top of planning, monitoring business growth, making key decisions and actually getting on with your day to day job and passion, is not easy. However, if you want to achieve your personal or business aims, you need to do a little planning first.
Basic financial planning will include these stages:
Setting goalsEvaluating your current financial statusPrioritisingDeveloping your planMaintaining and monitoring goals
(1) Setting goals
Choosing what you want to achieve is the first important step to financial stability and aligning your focus. You might be looking at increasing your business profit, achieving growth through acquisition or getting your practice ready to sell. You could shape your business targets based on your own personal goals. Categorise these as short, medium and long term achievements.
Once you have clear goals written down, creating a plan based on these will be much easier.
(2) Evaluating your current financial status
Look at your assets and liabilities and see if and how these can help you achieve your goals. You might be closer to meeting some of your targets than you think!
It is likely that you will have more targets than you can currently manage at once. You should prioritise your goals to avoid taking on too much and achieving nothing. Your accountant or financial advisor will be able to help you make these decisions.
(4) Developing your plan
Firstly you need to work out the best way to meet your aims. For example, you might want to focus on cost management or perhaps investment in staff, new equipment or your premises.
Then you can put in place processes and actions to make your plan happen. Again, you might need to prioritise your tasks so you don’t take on too much at once.
(5) Maintain and monitor goals
Choosing key performance indicators (KPIs), or incremental targets to measure yourself against your plan, will help you keep on track. You should review your plan at regular intervals and update targets, actions or milestones as appropriate.
Making decisions around business direction and keeping on top of key milestones can be difficult when you’re busy and focussed on other aspects of your practice.
For successful financial planning you may need support, which could include talking to your accountant to organise cash flow and manage investments, and your insurance broker to mitigate the risks that could affect your plan.
You also need your practice team around you to monitor and take on relevant activities help you meet those goals.