OL: business design, deve, plan

budget

• itemized summary of estimated or planned expenditures for a set time period along with proposals for financing them

  • made up of various costs: variable, fixed

• OT should have system in place to monitor spending, contracts, & monthly costs

• important to be aware of clinic financial stance

• considered in ALL business decisions

financial plan

• balance costs of doing business against the reimbursement or revenue & determine whether the business is profitable & solvent (able to pay bills)

• important to prioritize spending & maximize resources

• business must be profitable to be viable & provide staff with gainful employment

• OT leaders must recognize financial plan as major guiding doc

variable costs

• vary directly with output (productivity) so when output increases, variable costs also increase

  • outside services, supplies (billable: AE & non-billable: w/c), repair & maintenance, advertising

• EX: sell more lemonade at lemonade stand > cost for supplies will increase; use of splint material in hand clinic

fixed costs

• do not vary with output

• EX: rent, taxes, insurance rates, heating, salary, payroll, depreciation, loans, etc

business costs

• variable & fixed

• can vary slightly but usually predictable

• must be paid on time (no matter what)

salary

• some settings pay in annual salary

• exempt employees work until job is done & do not have time limit on 40 hrs

• yearly budget may want to include annual cost of living increase in salary

  • EX: cost of living increase in 2021 1.3%

    • 1.013 x $68,000 = new salary

cost of living raise

• increase in income that correlates with the rise in the cost of living

• often applied as benefits, salaries, and wages

  • most common is incre in social security benefits

benefits

• FEDERALLY REQURIED BENEFITS:

  • workers comp

  • time off for jury duty or military service

  • tax withholding

  • state & federal unemployment taxes

• BENEFITS CONSIDERED PRIVILEGES

  • paid vacation

  • sick leave

  • health insurance

  • holidays liability insurance

  • continuing education

rent

• cost associated with use of specific building or land to carry out services

• consider negotiating changes to building (space may need modifications for clinic use)

depreciation

• amortization (re-payment) of capital assets which are items with useful lifespan of longer than year and not intended for sale during normal course of business

• certain percentage of products worth is deductible for tax purposes

• depreciation of capital assets include

  • computers, larger therapy equipment, expensive items used for tx (e-stim, hydrocollators, etc)

insurance

• used to offset potentially huge costs associate w/business (liability on property/products)

• PREMISE liability: protection from any issue that may effect clients such as falling on ice, slipping due to rain, falling in clinic

• PROFESSIONAL liability: offers protection from any incident that affects clients during treatment; malpractice

miscellaneous costs

• unspecified and small expenditures without separate accounts including…

  • emergency purchases

  • petty cash for needed items

  • misc items need for facility (cleaning supplies, toilet paper)

overhead costs

• Operating expenses of business including

  • costs of rent

  • utilities

  • interior decoration

  • taxes exclusive of labor and materials.

• CORPORATE OVERHEAD: administrative aspects of business that may be centralized

  • human resources, billing, medical records, marketing, executive branch of a business (CEO, CFO).

budget justification

few sentences that allow viewers to understand reasoning and detail behind expenses associated with budget.

capital expenses

• BIG EXPENSES: expenditure made for asset with useful life of more than 1 year that increase value of or extends asset’s useful life.

• usually minimum dollar amount w/ detailed justification.

• EX: $6,000 tilt table

cash flow

• sustains the life of an organization.

• holds true for OT clinics, households, schools, businesses, agencies, clinics & Fortune 500 companies.

financial statements: 3 docs

1. income statements- reports the revenue, expenses, & net income for a given period of time.

2. balance sheet- reflects the overall position of the organization at a specific date & summarizes the financial history of the organization.

3. statement of cash flows (SoCF)- integrates the income statement & balance sheet; simplifies financial statements

statement of cash flow (SoCF) 3 components

1. cash flow from operating activities

   1. normal day-to-day; net flow; revenue for memberships, conferences, books etc

   2. why statement; what & how income is spent/owed

2. cash flow from investing activities

   1. change in value of investments owed

   2. interests & dividends; capital gain

3. cash flow from financing activities

fiscal year

• accounting year an organization adopts as the period of annual reporting

interest & dividends

• interest paid on money borrowed or lent

• dividends are payments made on the basis of owning stock

capital gain

• taken into revenue when investment is sold

• EX: buy stock for $10 and sell for 15 = 5 dollar capital gain

accounts receivable

• balance of money due to firm for goods or services delivered or used but not yet paid for by customers.

  • EX: credit

• listed on the balance sheet as a current asset.

prepaid expenses

• monies paid for events in the future.

• EX: paying car insurance 6 months at a time; AOTA making payments for the 2025 conference location.

inventory

• items that are held & owned by an entity that can or will be sold

deferred income

• revenue not taken into net income because event has not taken place in current fiscal period.

• EX: paying AOTA conference fees in December for a conference in April.

cash management

• what

• wire transfers

• automated clearing house

• reviewing accounts, credit card transactions, deposits

• WIRE TRANSFERS: electronic movement of money between financial institutions.

• AUTOMATED CLEARING HOUSE: similar to wires; the payments are automated and happen in a routine manner.

  • EX: direct deposit

• tax payments: state & federal

accounts payable

• amounts owed to other companies & people

credit source

• places that a business can on to provide it with cash.

• MORTGAGE: usually the bank will extend a loan up to 80% of the building’s value.

• LINE OF CREDIT: loan, the bank will view the organization’s SoCF to understand business operations.

it is important to _____ ______ when dealing with finances

plan ahead

negotiation

• what

• goal for successful negotiation

• salary negotiation

• being prepared, personable, & likeable in the interview- may lead to a better offer & place to start negotiation.

• men negotiate more than women

  • men expected to negotiate; women violate gender norm when negotiate

• goal of a successful negotiation: achieve our objectives and continue to have people like us.

• SALARY NEGOTIATION:

  • Prepare and do market research.

  • what is the current rate/range?

• be prepared to explain why.

  • specialized training, knowledge, demand

article 2 negotiation components for women

1. come across as nice, concerned about others, etc; relentlessly pleasant

   1. more instrumental approach (“this is what i deserve; im important”) people react negatively

   2. preface wage gap & intention to negotiate

   3. use “we” instead of “I”

2. provide legitimate explanation for the negotiation

   1. suggest someone of seniority encourage negotiation

   2. cite industry standards

   3. every negotiation is unique; must adjust

negotiation & women

• reports suggest that women could shrink gender pay gap by negotiating more effectively

• women face dilemma; negotiation can be positive for benefits & salary but come with social consequences

negotiation strategies (6)

1. know your audience

2. reaffirm your commitment

   1. “i’ve gotten offers elsewhere, but I would love to stay here.” appear loyal

3. use questions

   1. what would happen if i wasn’t here? how would this work is i was gone?

4. connect what’s good for you to what’s good for the company

5. have someone advocate on your behalf

6. focus on more than money

4 areas for negotiating a job offer

1. VERBAL COMMUNICATION:

   1. help them understand what you are requesting

   2. make it clear they can get you

   3. negotiate multiple issues simultaneously

   4. think through timing of offers

2. UNDERSTAND ENVIRONMENT:

   1. person across table

   2. constraints

   3. consider whole deal

   4. don’t negotiate just to negotiate

   5. they are not out to get you

3. QUESTIONS:

   1. be prepared for tough Qs

   2. focus on Q intent

4. ATTITUDE

   1. don’t underestimate importance of likability

   2. stay at the table

   3. avoid, ignore, or downplay ultimatums

   4. maintain sense of perspective

how to negotiate salary after you get a job offer (8)

1. become familiar with industry salary trends

2. build your case

3. tell truth

4. factor in perks & benefits

5. practice your delivery

6. know when to wrap it up

7. get everything in writing

8. stay positive