Q&A: Business planning
Accountant Anthony Brand explains what business planning consists of, how to get consensus, running a SWOT analysis and pitfalls in strategic planning
Q. What’s the difference between a business plan and a budget?
A business plan is also a consensus or agreement by the partners of how the practice should perform over a specified period. There is a common misconception among GPs and practice managers that the business plan and the practice budget are one and the same. To clarify:
- A business plan is a statement of strategic objectives and seeks to address how these objectives will be met. Hence the term ‘management by objectives’ which was first popularised by business guru Peter Drucker in his 1954 book The Practice of Management.
- A budget is part of the planning process. It is an estimate of income, costs and cash flows over a specified period of time and should reflect the objectives set by the business plan and other events that are forecast to occur.
Every business should set a budget and GPs practices are not exempt – especially considering the squeeze in practice funding ahead.
Q. What period should a plan cover?
I would suggest you look at the year ahead in detail and then the next two years in outline.
Q. How do we get consensus?
All partners must be allowed to air their views and state their own personal objectives and vision as to where they see the practice going. I like the idea of a partners’ away day or time-out meeting. These can work well provided that:
- Everyone who should participate does so and is allowed to state their own objectives. This is not the time for deciding to retire in 12 months time and not telling everyone about it.
- A facilitator (perhaps independent of the practice) is present at the meeting to resolve conflicts and help put together the consensus. He or she is not there to lecture.
- A written action plan is created.
- A follow up meeting is scheduled.
Q. What should we talk about?
Analysing the strengths, weaknesses, opportunities and threats (SWOT) of a plan should allow you to cover most of the issues. Consider questions such as:
- What do we do well?
- What do we do badly/inefficiently?
- How will contract changes impact on us?
- Have we got the right staff mix?
- Have we got the right partner/GP mix?
- Are our premises up to scratch?
Inevitably scrutiny of the practice’s financial budget will play a part in this review. Benchmarking of performance against similar practices is also of great value in pinpointing strengths and weaknesses. If your accountant is a member of the Association of Independent Specialist Medical Accountants you will be given an overall comparison of annual practice results to a national average, which can help identify any areas for concern.
Q. What are the main pitfalls in strategic planning?
Failure to implement the plan is likely to be the biggest, but three other common pitfalls are:
- Not involving everyone.
- Not reaching a consensus.
- Not putting down a written plan.
Anthony Brand is a partner at HW Chartered Accountants, Maidstone, a member of the Association of Independent Specialist Medical Accountants.