About this time last year I put my money where my mouth was and revealed my 2010 New Year’s Resolutions on this blog. If you’re like me you struggle to maintain your resolutions until the end of January, let alone throughout the year. There were four resolutions made at the time; reduce AR, reduce inventory expense, increase vacation time and reduce staff turnover. So how did we do?
At the start of the New Year we instituted a policy that ALL new clients had to pay at the time of service. Established clients who had historically paid on time were advised that if any of there bills went past 45 days they would revert to COD only status. A number of clients who typically took 60-90 days were told effective immediately they were COD. Success with this initiative meant that this rule could not be adjusted for anyone. The end result is that we reduced average days to AR by 36%, and our average days to AR is now approaching 30 days! What does this mean? Increased cash flow, less interest paid on our line of credit and less time wasted chasing after clients for a late bill.
Reduce Inventory Costs
Cost of goods sold (COGS), the amount of money the business spends buying medications and supplies, is one of the biggest expenses facing a practice. This was harder to do than reduce our AR but we were able to reduce our COGS by 2%. We do need drugs to service our patients but we don’t need to keep large amounts of it on the shelves of our pharmacy. We began doing more frequent counts of our top-selling items to make sure we didn’t have drugs approaching expiration, and to ensure that we were billing for all the drugs dispensed. We also looked at historical numbers to see how much of a certain product was needed at a given time of the year. At any given time there are 2 weeks worth of most drugs on our shelves depending on the season. You don’t see Regumate on our shelves in November. If a client needs it then we can order it in overnight. It’s rare to have an emergency that requires Regumate right away to treat a horse.
Increase Personal Vacation Time
This one was easy to measure. My wife and I have never taken a vacation in the fall during all of the years we have been building up the practice. This year we went away for a week in October. When we came back everything was great. The practice was still standing and everyone, including our clients, did well without us.
Reduce Staff Turnover
This area was the hardest one to work with. We lost some support staff at the beginning of the year who went on to pursue other goals, but in the second half of the year we didn’t lose a single person. I believe that is because we have become better at interviewing people and we are beginning to show an established culture that guides us in hiring people and makes our workplace environment a lot more fun and satisfying.
This leads to my resolutions for 2011. I’m only tackling three this year.
I would like to reinforce our culture so it is ingrained in everything that we do. Why is culture so important? It defines who we are, how we treat our clients, and why we do what we do. Explaining our culture will require another blog so keep returning and I will go into that in the near future. If your interest is really piqued I would recommend reading “Delivering Happiness” by Tony Heisch, the founder of Zappos.
Use a Budget
This year we are going to work from a budget. I can’t imagine any company not having a budget but I can think of only a handful of equine vets who use one. Most of us have a household budget that typically manages a lot less expense than a vet practice so why don’t we use one in our business? I’m curious to see if we save money this year by using one.
Fifty two. That is the minimum number of blogs I am going to write this year. I am also going to include sections of blogs written by other people. I enjoy writing about aspects of our business that interest me, and the process of writing forces me to think through my ideas. There are numerous unfinished blogs that don’t cut the mustard because of this process.
Here is one resolution from a reader that I wanted to share:
Joanne wrote, “ it is easy to fall into the trap of assuming we know what the client wants. Part of 2011 for me is to focus on the services I provide that clients actually want (vs services they don’t want or needs they have that don’t fit with the care we provide).”
I think the key phrase is resisting the temptation to offer services that diminish the great medical care you provide. Good luck Joanne. I hope you can write us through the year to let us know how it is going.
Finally, Dr. Andy Clark offers the following on how he prepares for his New Year’s resolutions. The message of measuring results is key.
Rocks, Gravel, Sand and Water
Dr. Pownall mentioned a few weeks ago that he was considering writing a blog on his New Year’s resolutions. I have always looked at New Year’s resolutions as another name for goals. I spent some time thinking about the various approaches people take to goal setting.
My wife Kathleen and I use New Years Day as our family retreat for goal setting each year. We set one year goals, three year goals and ten year goals. We tend to set ambitious goals; personal, financial and business related. After we finalize our goals, we take some time and look back to review how successful we were attaining the goals we set a year ago, three years ago and ten years ago. Accountability to yourself for reaching those goals is critical to success. You can’t be accountable unless you measure your results.
I used to find the most challenging part of goal setting to set the right goals as the highest priority. For several years I worked with a business coach, Lou, who used a simple but great visual aid to help with goal setting.
Imagine starting with a large bucket. Put big rocks in the bucket until it is ‘full’. Then put some gravel in the bucket until it is ‘full’. Then put some sand in the bucket until it is ‘full’. Finally put water in the bucket until it is full. This time it really is full. The bucket is a metaphor for your year and the rocks etc are your goals. One way or the other the bucket will get full. If you don’t get the rocks, the really important goals, in first they won’t fit and you will go another year without accomplishing the ‘rocks’, the important goals.
When I set goals, I always make myself put the rocks in the bucket first. Those are 4-6 goals that I really want to accomplish. I refer to them as my ‘rocks’. I post them on a corkboard in front of my monitor where I have to look at them every day. Every day you get covered up with gravel, sand and water. It is just the nature of life. If you don’t focus on your ‘rocks’, they will slip away for another year.
What new years resolutions would you like to share with us?
Happy New Year’s everyone.