179
Chapter 16
Financial Forecasts
and Budgets
Generally, physicians are the type of people either fascinated with numbers
or daunted by them. Many small business owners are in these two camps.
The numbers in financial reports reflect past decisions but are not the deci-
sions themselves. They are the effect of the decisions. If you can forecast
how much money you will make each month in medical services, concierge
membership fees, and product sales (if any), you will be able to produce
a budget that tells you how much you will be able to spend on rent, staff
salaries and your own salary, equipment, and other business expenses for
your practice.
Here’s a budget challenge for new marketers and trade shows: If you mar-
ket your concierge practice by exhibiting at a home show or wellness event,
most people allocate the money to pay for a stand, but every stand has dec-
orations, backdrops, posters, materials, and giveaways. There are also fees
for setup because union members are the only ones permitted to drayage in
some states. (Drayage is the transportation of things over a short distance.
At conferences, drayage is the charge for the labor required to receive, store,
and deliver freight to your boothor exhibit location, remove, store, and
return empty containers, remove shipments from booths anddeliver to the
loading area of exhibit hall, where they will be loaded on common carrier
trucks.) There are lots of rules associated with conference sponsorship and
booth rentals, and each one of them seems to have an associated cost, all in
addition to the booth or stand rental. They can unravel a marketing budget
quickly if you arent careful.
180Handbook of Concierge Medical Practice Design
Another budget monster is marketing mailings. We are so used to the
free sending of emails. To send to people who don’t have computers or
use them like a lifeline, design for print is very different than design for
the web. Printing costs vary by source and the time line, and then there’s the
postage and the sorting service, and the mailing service. If you use stock
photographs, there’s the license based on the type of use you will have for
the photographs.
So often, transition consultants want to send two or three mailings to
your existing 3,0004,000 patients. The postage for those mailings is often
more than a letter. At present, first class letter mailings are $0.49, so a mail-
ing to your patients will include the costs of design and layout, composi-
tion, printing, envelopes, stuffing, sorting, and postage. Each mailing could
cost you $3,500. Even if you captured all 300600 patients for a concierge
membership max, what is the cost per conversion? Many of the consultants
I’ve spoken with want to design three mailings, and send them out to all
4,000 patients. That’s a commitment of $10,500 for three mailings. I know
a few doctors who have agreed to do it, and their return on investment
(without the payment to the consultant for the brilliant idea) was three to
four membership purchases, total. Sorry, but I can come up with many other
ways to spend $10,500 to attract fewer than five customers. That’s a customer
cost of over $2,000 per customer. No wonder their conversion estimates are
in the $250,000 range.
It’s difficult to create a real budget when you don’t have all the facts. But
start thinking about your marketing budget because that will be a tough
challenge in the beginning until you learn what works.
Exercise 1: Marketing Budget
Monthly
1st Year
Total
1st Year
Monthly
2nd Year
Total
2nd Year
Monthly
3rd Year
Total
3rd Year
Professional
Assistance
Consultants
Ad Agencies
Direct Mail
Specialists
Financial Forecasts and Budgets181
Monthly
1st Year
Total
1st Year
Monthly
2nd Year
Total
2nd Year
Monthly
3rd Year
Total
3rd Year
Graphics Design
Brochures/ Leaflets
Signs/ Billboards
Displays
Samples/ Giveaways
Media Advertising
Print
TV
Radio
Online
Video
Other Media
Phone Directories
Advertising
Tchotchkes
Direct Mail
Website
Development,
Programming
Maintenance/
hosting
App licenses
Artwork licenses
Software &
modules
Trade Shows
Fees & Drayage
Travel
continued
182Handbook of Concierge Medical Practice Design
Monthly
1st Year
Total
1st Year
Monthly
2nd Year
Total
2nd Year
Monthly
3rd Year
Total
3rd Year
Shipping
Exhibits & Signage
Promo Tchotchkes
Door prizes
Public Relations
Materials
Informal Marketing
and Networking
Membership/
Meetings
Entertainments
Other
Grand Totals
Another worksheet youll need to become familiar with is the Profit and
Loss Projection. Let’s have a look.
Exercise 2: Profit and Loss Projection
Item
Months
Add Columns
for Each Month Ahead
INCOME
Gross Sales
(−) Paid Out Commissions for Marketing (if any—don’t
forget managed care write- offs)
(−) Returns & Allowances (if any)
NET SALES
(−) Cost of Goods Sold (if any)

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