Tuesday, 28 December 2010
The planned story for 2011: How the NOH team will fight back
Let’s get in the water and not just dip our toes. Let’s fully engage with existing and prospective customers to ensure we are the best and most profitable medical services company in the world.
We enter 2011 with good news and bad news.
The good news is that we have the most prospects at the start of a New Year then we have ever had in 8 years. That is 9 potential new clients worth more than 1 million pounds per year in revenues. 5 oil and gas, 1 mining, 2 media, 1 sports. We also have prospects with the NHS and private schools.
The bad news is that although we maintained our service standards we had a terrible financial 2010. So the first 3 months of 2011 will be very hard work.
We have taken decisive action to reduce costs by the following actions:
1) Moving admin from the basement of NOH to 126 Harley Street (they do our X-rays). This saves 36K per year.
2) Redundancies/natural leavers – saving over 30K per year
3) Reduced admin hours – saving over 20K per year
4) Salary cuts in admin – saving 40K per year
5) Fixed fees for doctors – saving over 30K per year
6) More work for nurses – saving on doctor’s fees
In total over 170K of cuts to our overhead. We now know our fixed costs per month and can budget for these with much less variation than ever before.
One additional cost is the 10K we will spend on rolling MBA interns (Rotman University/American Intercontinental University), students and Chinese (via Carrie Waley of Mandarin Consulting) support staff. These costs will be much less than full-time staffers and carry no agency/recruitment fees. They come out of the marketing budget.
Almost half our revenues are things we give to our clients: vaccines, medication and kits. So in 2011 we need to do a lot more of that and make it easier for clients to get these things from us: on-site, off-site and via the web.
2011 will see us co-ordinating and managing a LOT more off-site work.
We may also drop some services that don’t add up to decent numbers or profits.
Our breakeven figure for each month of 2011 will be communicated to all the team and we will track this daily, weekly and monthly.
We are improving:
• billing processes and will review all bills within 24 hours of the previous days daily takings
• sending all invoices within 24 hours with purchase orders
• identifying invoice discrepancies within 24 hours
• proper management of cash and the reconciliation
• re-instatement of the weekly stock meetings to ensure adequate but not excess stock
• management of creditors (people we owe money too)
• management of debtors (people who owe is money)
We will undertake regular cash flow projections based on 1) the first 6 months of 2010 and 2) the last 6 months of 2010 both with the 10% price uplift and new 20% VAT.
The new marketing plan will be shared with all. The budget for this will be around 60-80 K (around 5% of turnover). Marketing and innovation are how we will win new customers in 2011 and beyond and increase usage amongst our existing customers.
One of the key elements of marketing costs us nothing. It’s the staff attitude, engagement, commitment and training to ensure excellent customer service. Jay Levinson describes customer service as ‘anything the customer wants it to be.’ We will stick with that!
In 2011 we will do new things, we will do something differently but all with one aim ‘to be the best and most profitable medical services company in the world.’
The Story of 2010: A review
The year started badly with the loss of Australia visas. This was a random event in that we were acknowledged as a good quality provider but the Australian Government wanted to cull providers. Our main competition in London had a technology advantage over us in that they had for years had in an-house X-ray service. We planned to have an on-site X-ray service but too late!
This loss was 200K of cash revenue per year. That monthly cash income helped us pay our bills on time. What should have happened was a radical, deep cut in our overhead last January. Instead, I only shaved a bit off overhead. The surgery was way too superficial!
It reminds me of the Jack Welch quite about companies seeking to reduce margins by 4-5% when they should be looking to cut 40-50%.
I have to ask myself what led to this false hope (hubris) and lack of action?
We had new work from the NHS, which we expected to grow and not dry up as it did (new government changes).
We also had tenders for:
Oil Company A (9 months later they still have not decided!)
Security Company B (a lot of effort, a whole day to present and then the most annoying thing was that the board had not even agreed any budget for the tender)
Media Company C (possibly postponed because of their own financial issues)
My message to HR Managers is ‘don’t waste people’s time if you don’t have board approval for the budget of your tender!”
Message to self: make the cuts first, and hope for more business later!
Our main costs are rent and people. To be at Number One Harley Street (as Carlsberg might say ‘probably, the best medical address in the world’) we pay a huge premium (80 pounds per square foot). However, for our administration, this premium is too much.
Finally, in 2011 we are moving administration from 1 Harley Street and saving 36K a year in the process. We should have done this some time ago (it was considered but never implemented).
Our other high costs are salaries, admin and medical. On the admin side we had too many people, some of the wrong people, failed to recruit effectively and incurred high agency costs.
The numbers game was complicated in that the most talented person was covering maternal leave and needed to be kept on when the less efficient ‘leaver’ returned. The ‘leaver’ did not work out and eventfully resigned. Along the way we had the classic problems of line management due to under attention and under investment on my part.
Resolving some of the people and organisational issues took up a lot of time. Recruitment failures all carried a price, both financial and organizational. The worst example (now gone) lost in 1 day business that it had taken 9 months to capture! The loss may be as much as 1 million pounds over a 10 year period.
The key message about the right people, in the right seats, doing the right things at the right times is so true.
The other lesson is to recruit for engagement and then with the right team ensure that all employees are both engaged and satisfied. Alongside this communication raises its head. Email doesn’t cut it. So many people claim to know nothing or only a % of the facts despite receiving an in-house email. Nothing can beat regular team, meetings and internal newsletters (which people sign off on when they have read them).
Managing doctor’s hours is complex and trying to maximize fee earning time more so still.
In 2011, I return to more clinical work to keep costs down.
Operational change and efficiency have been slow but in the right direction. It still bugs me that the organisational memory is not as good as it should be and too many staff still do not know, what (by now) I believe they should know.
The challenge for 2011 is: ‘How do we ensure that everyone knows what they need to know and knows where to find the information that they need to best serve our customers?’ Answering these questions will be one of the priorities for 2011.
A Wiki (more later) may be part of the answer.
On the strategic side I think that we have a lot right. It just needs tightening up.
Our strategy is for more work in the following areas:
Oil and gas (5 tenders in 2011)
Mining (I tender)
The NHS (now post White Paper reforms)
Private schools (bursars. Headmasters, nurses)
Media ( 2 tenders)
Sports clubs (Rugby Hep B tender)
Our focused marketing plan for 2001 had been developed and will be shared with my team (thanks Jay Levinson!).
The 2011 marketing plan was simple – to upgrade the website, focus on core markets, undertake more tenders (still an area of weakness).
The new website clarifies what we do but came 3 months too late in the year. I have concerns that our Search Engine Optimisation (SEO – how Google and others find us) is sub-optimal and we may need to review the decision not to spend any money on Google ads etc. The second half decline in 2010 revenues is still hard to explain.
The November ‘Medical Innovation’ conference was a success and we will now run this annually.
In 2011 we will hold a promotional evening for Japanese companies.
Finance has been a key problem. The lessons from this:
• Billing needs to be accurate and on time
• We need a constant review of daily, weekly, monthly income
• We need a constant review of daily, weekly, monthly of trends
• We need budget planning and rolling forecast (monthly)
• Appropriate action to reduce costs
• Appropriate marketing to do more of the most profitable things we do
In 2011 I cannot afford to take an eye off the numbers as I did in 2010. I will need to know on a daily basis what we have taken in so far each month in cash, credit cards and what is to be billed. I need to know what our standard overhead is and what exceptional expenditure has occurred during the same period.
I need to regularly review
1) the profit and loss
2) the balance sheet
3) the monthly management accounts
4) the projected cash flow based on rational assumptions of the data.
I need the full facts as to who is owed money at any one time and why this is so.
How much pressure are debtors under themselves! How much pressure are they causing us? All this needs to be recorded.
How soon are our invoices going out (should be within 24 hours)? Are they accurate? Are they associated with the correct purchase orders? Does each customer companies’ accounts department know who we are and why we should be paid on time? Is all this safely documented? Are we emailing or calling prior to the invoice due date, on the date, with appropriate follow up and action (possible suspension of services) if 7 days late? Are we ensuring each relevant invoice to us is billed on to our clients?
If what we owe is rising, have we attempted to make any agreements and if so with whom, when?
In relation to our customers we need a weekly overview of:
1) Who has been in for what?
2) Who has made enquiries and what has been the follow up
3) Review of our VIP and celebrity clients (why did famous comedian, Mr Funny, make his second vaccine appointment at another clinic when he seemed happy with us first time around?)
In the 2011 report to follow I will share the plans for this year and in a separate document the marketing plans for 2011.
This loss was 200K of cash revenue per year. That monthly cash income helped us pay our bills on time. What should have happened was a radical, deep cut in our overhead last January. Instead, I only shaved a bit off overhead. The surgery was way too superficial!
It reminds me of the Jack Welch quite about companies seeking to reduce margins by 4-5% when they should be looking to cut 40-50%.
I have to ask myself what led to this false hope (hubris) and lack of action?
We had new work from the NHS, which we expected to grow and not dry up as it did (new government changes).
We also had tenders for:
Oil Company A (9 months later they still have not decided!)
Security Company B (a lot of effort, a whole day to present and then the most annoying thing was that the board had not even agreed any budget for the tender)
Media Company C (possibly postponed because of their own financial issues)
My message to HR Managers is ‘don’t waste people’s time if you don’t have board approval for the budget of your tender!”
Message to self: make the cuts first, and hope for more business later!
Our main costs are rent and people. To be at Number One Harley Street (as Carlsberg might say ‘probably, the best medical address in the world’) we pay a huge premium (80 pounds per square foot). However, for our administration, this premium is too much.
Finally, in 2011 we are moving administration from 1 Harley Street and saving 36K a year in the process. We should have done this some time ago (it was considered but never implemented).
Our other high costs are salaries, admin and medical. On the admin side we had too many people, some of the wrong people, failed to recruit effectively and incurred high agency costs.
The numbers game was complicated in that the most talented person was covering maternal leave and needed to be kept on when the less efficient ‘leaver’ returned. The ‘leaver’ did not work out and eventfully resigned. Along the way we had the classic problems of line management due to under attention and under investment on my part.
Resolving some of the people and organisational issues took up a lot of time. Recruitment failures all carried a price, both financial and organizational. The worst example (now gone) lost in 1 day business that it had taken 9 months to capture! The loss may be as much as 1 million pounds over a 10 year period.
The key message about the right people, in the right seats, doing the right things at the right times is so true.
The other lesson is to recruit for engagement and then with the right team ensure that all employees are both engaged and satisfied. Alongside this communication raises its head. Email doesn’t cut it. So many people claim to know nothing or only a % of the facts despite receiving an in-house email. Nothing can beat regular team, meetings and internal newsletters (which people sign off on when they have read them).
Managing doctor’s hours is complex and trying to maximize fee earning time more so still.
In 2011, I return to more clinical work to keep costs down.
Operational change and efficiency have been slow but in the right direction. It still bugs me that the organisational memory is not as good as it should be and too many staff still do not know, what (by now) I believe they should know.
The challenge for 2011 is: ‘How do we ensure that everyone knows what they need to know and knows where to find the information that they need to best serve our customers?’ Answering these questions will be one of the priorities for 2011.
A Wiki (more later) may be part of the answer.
On the strategic side I think that we have a lot right. It just needs tightening up.
Our strategy is for more work in the following areas:
Oil and gas (5 tenders in 2011)
Mining (I tender)
The NHS (now post White Paper reforms)
Private schools (bursars. Headmasters, nurses)
Media ( 2 tenders)
Sports clubs (Rugby Hep B tender)
Our focused marketing plan for 2001 had been developed and will be shared with my team (thanks Jay Levinson!).
The 2011 marketing plan was simple – to upgrade the website, focus on core markets, undertake more tenders (still an area of weakness).
The new website clarifies what we do but came 3 months too late in the year. I have concerns that our Search Engine Optimisation (SEO – how Google and others find us) is sub-optimal and we may need to review the decision not to spend any money on Google ads etc. The second half decline in 2010 revenues is still hard to explain.
The November ‘Medical Innovation’ conference was a success and we will now run this annually.
In 2011 we will hold a promotional evening for Japanese companies.
Finance has been a key problem. The lessons from this:
• Billing needs to be accurate and on time
• We need a constant review of daily, weekly, monthly income
• We need a constant review of daily, weekly, monthly of trends
• We need budget planning and rolling forecast (monthly)
• Appropriate action to reduce costs
• Appropriate marketing to do more of the most profitable things we do
In 2011 I cannot afford to take an eye off the numbers as I did in 2010. I will need to know on a daily basis what we have taken in so far each month in cash, credit cards and what is to be billed. I need to know what our standard overhead is and what exceptional expenditure has occurred during the same period.
I need to regularly review
1) the profit and loss
2) the balance sheet
3) the monthly management accounts
4) the projected cash flow based on rational assumptions of the data.
I need the full facts as to who is owed money at any one time and why this is so.
How much pressure are debtors under themselves! How much pressure are they causing us? All this needs to be recorded.
How soon are our invoices going out (should be within 24 hours)? Are they accurate? Are they associated with the correct purchase orders? Does each customer companies’ accounts department know who we are and why we should be paid on time? Is all this safely documented? Are we emailing or calling prior to the invoice due date, on the date, with appropriate follow up and action (possible suspension of services) if 7 days late? Are we ensuring each relevant invoice to us is billed on to our clients?
If what we owe is rising, have we attempted to make any agreements and if so with whom, when?
In relation to our customers we need a weekly overview of:
1) Who has been in for what?
2) Who has made enquiries and what has been the follow up
3) Review of our VIP and celebrity clients (why did famous comedian, Mr Funny, make his second vaccine appointment at another clinic when he seemed happy with us first time around?)
In the 2011 report to follow I will share the plans for this year and in a separate document the marketing plans for 2011.
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