Your Relationship with Your CPA Matters

Deborah Helton

Deborah Helton

Director

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Austin Buckett

Austin Buckett

Manager

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BiggsKofford was recently featured in an article in Physician Money Digest, where Deborah Helton and Austin Buckett talked about the strategic benefit that the relationship with your CPA can have for a medical practice. Read the article here.

For more information, e-mail Deborah or Austin.

Deborah Helton

Deborah Helton

Manager

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When it comes to benchmarking your practice, there are many ways to look at performance levels and how your practice operates compared to other practices within your specialty. What you don’t know about the business and financial aspects of your practice can hurt you.  Benchmarking your practice can help reveal areas for improvement to ensure that you meet your goals.

Comparing your practice’s health to others can help you:

  • Determine areas of growth
  • Evaluate costs & eliminate waste
  • Improve your staff ratios with regard to revenue and other target variables
  • Evaluate specific work processes
  • Make expense decisions with hard data

Once you have comparable data you can start to measure results and create goals specific to your practice.  The old saying is that you can only manage what you can measure. By creating and monitoring key performance indicators, also known as KPIs you can measure, monitor and improve various aspects of your practice, such as gross charges, collection rates, number of new patients, no-show rates and other important indicators.  Keeping your pulse on trends within these KPIs is vital to continually improve the health of your practice.

BiggsKofford has the tools and database to benchmark your practice within your specialty.  If you have questions about setting up key performance indicators and comparing them to other top performers in your practice’s specialty, call or e-mail Deborah Helton at (719) 579-9090 or dhelton@biggskofford.com.

Austin Buckett

Austin Buckett

Manager

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What is your New Year’s Resolution? About 40 percent of Americans will make a resolution this year, yet less than 20 percent of them will be successful. Despite the fact that most of us look to improve our surroundings, we have a very low success rate when it comes to identifying what those improvements are and acting upon them.

Unfortunately, the same trends seen on a personal level can be seen at the business level. Most businesses do not have a clear strategy or focus on where they want to be in the future and, as such, do not have goals established to get them there. For example, a common goal in business is to increase revenue (especially after the last few years), yet this type of goal setting has two main issues that usually prevent it from being maximized:

  • First, it is not specific enough, so we don’t know what level of increase would be deemed a success or what specific steps we will take to achieve the goal.
  • Second, it might not be aligned with our overall goal of increasing the value of our business. For example, we could win some new contracts but if they are unprofitable or a drain on our resources they could actually lessen our bottom line or have minimal impact despite significantly increased effort.

Another interesting statistic with regard to New Year’s Resolutions is that as people age, the likelihood of them setting resolutions decreases. The thought being that over time people get disenchanted with this process, as the success rate is low. However, the success rate is a function of poor implementation, rather than the goals themselves. If we can improve the way we set goals, then we can improve the likelihood of success and ultimately increase our chances of meeting our goals rather than leaving it to chance.

Before setting any goals, it is important to set your overriding goal first and then ensure all other goals are aligned. For example, if your primary goal with your business is to sell it when you reach 60 years and retire, then maybe buying a new facility when you are 56 is not a good goal. You would likely not own the new facility long enough for it to create significant value, and your resources might be best served being invested in other areas. Alternative goals that would be appropriate would be to determine who you would most likely sell to when you do sell, what value a buyer might place on your business in its current form and what parts of the business should you focus on over the next four years to increase its value the most.

Once you have an overall goal established, keep these three things in mind with all other goals and your chances of success will greatly improve:

  1. Ensure your goals are achievable. Setting goals too high can be demoralizing for your team if they have a very low percentage chance of actually happening. Setting goals that can be a stretch but have a good chance at being exceeded if the stars align can give everyone the right amount of motivation to work towards them.
  2. Be specific. Once you have determined your goals, start creating a plan around how to achieve them. For example, if you goal is to increase your revenue in 2011, you will need to determine specific targets to aim for over the course of the year: what type of clients you will want to win, how to increase revenue from and what your marketing plan will need to look like in order to achieve these specific revenue goals.
  3. Be flexible. Don’t lose sight of your original goals during the year. Monitor your progress throughout the year on a regular basis. If situations have changed or things aren’t working out as quickly or as well as you had predicted, feel free to adjust your goals rather than abandoning them once they look out of reach.

If you have questions about how to move your business to the next strategic level, please contact Austin Buckett.

Austin Buckett

Austin Buckett

Manager

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Many business owners think benchmarking is for big or troubled companies. But no company, regardless of size and performance, can afford to ignore it. In today’s changing business environment and economy, it’s hard to keep up with your competitors, and benchmarking allows companies to compare their productivity and efficiency to other businesses.

Two Types of Benchmarking

The first step in a benchmarking program is to understand what benchmarking is. Most of us know that it is the process of comparing your own company to others to identify areas in which you can improve your performance. However, there are at least two principal types of benchmarking: overall benchmarking and process benchmarking. Overall benchmarking looks at business performance in general, such as total return on capital.

It’s important to do both types of benchmarking. Overall benchmarking may tell you that you need to improve, but without process benchmarking you may not know how or where to improve. Overall improvements cannot be made without improving key processes.

Choosing Models

The second step in the benchmarking process is to choose the company or companies you want to benchmark. Many companies assume that they should benchmark within their own industries. Often, this assumption is correct. If you are below average, it’s a good idea to learn how to meet your industry average, and to do that you need to benchmark other companies in your industry. But if you want to excel, to become superior to your peers, you should look outside your industry for ideas. Motorola, for example, benchmarked L.L. Bean when it wanted to improve its order shipping process.

Where can you find benchmarking data? Most experts agree that within the industry, you should contact key executives such as vendors, trade associations, competitors, former employees and customers for suggestions. You should also obtain analyst reports, proxy and financial statements and 10Ks from industry competitors. Outside the industry, it would be best to obtain annual reports from publicly traded companies and investigate private firms in publications such as Ward’s Business Directory or Dun & Bradstreet.

Setting Benchmarks

The third step in the process is to identify benchmarks. What do you want to compare? This is the most complex stage of the benchmarking process.

It’s critical that the benchmarks you choose reinforce the company’s strategy. If you want to offer the best price, you must set benchmarks that are different from a company that focuses on total customer satisfaction. For example, Nordstrom benchmarks would be very different from K-Mart’s benchmarks.

To choose proper benchmarks, keep in mind the stakeholder categories of any business: customers, employees, vendors and shareholders. Determine which of these relationships you are trying to improve upon with your primary goal, but keep in mind that they’re all related. For example, if you try to improve customer satisfaction, you should also ensure you maintain sufficient returns for your shareholders. A complex set of relationships needs to be balanced.

Comparing Data

After you have determined who and what you want to benchmark, you can begin the benchmarking process. Although the process involves the close scrutiny of another company’s methods, taking a tour of another company’s plant to learn how it works isn’t enough. You’ll also need to scrutinize the other company’s business goals, operations and finances.

Your accounting firm can help in these areas. Some companies prefer that their accounting firm focuses only on financial benchmarking, but this often provides inadequate information. Many companies work with their CPA firms to design a “Balanced Scorecard”. A Balanced Scorecard brings both financial and nonfinancial measures clearly into view. It measures traditional financial data like total return, inventory turnover and margin. It also measures nonfinancial data, like market share, relative quality and employee satisfaction.

Take Action

The final and critical step is to make changes based on the benchmarking process. All too often, companies go through the benchmarking exercise but don’t take the actions needed to improve or give up when improvement is not seen fast enough. Benchmarking, however, is not the only analysis companies should make; it’s simply one element of a comprehensive improvement program.

If you have questions about how your company could benefit from benchmarking, please contact Austin Buckett.