Financial statements are the measuring stick for the financial results of a business. Very commonly, veterinarians tell me privately that they wish they knew more about financial analysis and financial management of their practice. My advice to them is always the same. Keep it simple, get started, and just keep learning. It really is that simple.
Keep it simple.
Get a competent bookkeeper and accountant and ask them to prepare and keep current your financial statements for your practice. They should be able to produce accurate reports called the Profit and Loss Statement otherwise known as an Income Statement, a Balance Sheet, and the Statement of Cash Flows. Provide them the data or access to your data that will allow them to produce these reports and start learning about them. Go online and read simple references such as Investopedia or Entrepreneur. There are many simple resources to get you started. Just keep it simple and get started.
Get started.
Get these reports and begin to read them frequently. Compare them to previous months and years to get a feel for your business over time. Identify and utilize a handful of financial measures that will tell you at all times the state of your business quickly. Refer to the financial dashboard at IsMyPracticeHealthy.com for an example. If any measure is abnormal, or moving in a negative direction, ask your financial team to find out why. Once you know why, then you can decide what to do about it. If it's normal and trends are good, then keep going. It really is that simple. The key is to get started, and use your data to examine results and make decisions.
Keep learning.
Most veterinarians tell me that once they got started and began learning about practice finance, that they get invigorated and excited to learn more. There are a lot of resources such as Veterinary Study Groups and others that will provide great professional business education and a very invigorating professional experience to improve your business and to prolong your enjoyment of veterinary practice. Keep learning!
