As last year winded down and you looked toward this year, you probably had goals and dreams of where you would like your business to go and how to make it grow. You prepared what you thought to be a realistic budget. Preparing the budget is the first step; reviewing it at least monthly is as important to the success of your company. Don’t let your budget gather dust and never look at it again.
If you haven’t prepared a budget for the year yet or haven’t been reviewing your budget monthly, it is not too late. Do it now. Preparing a budget is one of the easiest and yet beneficial things you can do for your business. Our customers see now what the results of their decisions will be in the future. Usually the first draft of the budget shows an unacceptable financial result. Without a budget you don’t find this out until the money is gone. With a budget you have a chance to adjust you plans in advance. Then the budget allows you to compare to how you actually performed.
Are you on track? You may need to revisit your resolutions, but don’t give up, readjust. You can adjust your budget now to reflect the rest of the of the year. Keep going. Here are some tips to do just that:
- If you haven’t already, create a budget based on last year’s actual numbers
- Schedule your budget review on your calendar monthly and follow through
- Have a review buddy to keep you accountable. Meet within the first 10 days of the month
- Create a Task list to meet your goals and assign the task to a specific person
- Each month create more Tasks to help you reach your goals
- If absolutely necessary, readjust the remaining months budget after updating
Common points of frustration occur when expenses are unrealistically low or forgotten altogether, while sales or revenues are unrealistically high, or worse yet, just a dream. With proper planning and research of what is really involved, goals can be accomplished. Here are 5 questions to ask yourself when approaching a budget review:
1. Are you meeting your sales goals? If not, how will you address the situation?
- Add new products?
- Eliminate unprofitable products that may be zapping your time?
- Are you pricing your product correctly?
- Is your marketing/sales plan being followed?
- What is the potential revenue from the changes you are making?
2. Are there new/unexpected events to consider? If so, what expenses and potential income are involved?
- Registration costs?
- Will travel be involved?
- What is the potential revenue?
3. What personnel growth is needed? What is the actual cost?
- Will it be part-time, full time, or both?
- Are benefits involved?
- Is an outside payroll and/or company needed?
4. If new personnel, there are more things to consider as well:
- Will additional phones be needed, cell phone or land line?
- Are more supplies needed?
- Is there enough office space?
- Is a new work station ready or additional desk needed?
- What about another computer?
5. Is your rent scheduled for an increase?
- When? How much?
- If you pay for utilities, have you factored in any rate increases?
- Can your utilities be put on a budget with the electric or gas company? If so, are you on it?
As you answer these questions you will fine tune your budget and increase your chances of success. Many things go into a budget review. There is a direct correlation between companies who keep an eye on the progress and success. With a budget and review process in place, you will dramatically increase your chances of reaching your goals.
Kathy has over 30 years experience helping small businesses succeed. As a commercial lender, commercialization expert and now as a QuickBooks diamond level advisor, Kathy understands the challenges small business owners face. Her experience helps business owners quickly accomplish their financial goals.
As the owner of BudgetEase, Kathy works with clients to develop a plan to efficiently process 1,000s of small transactions so owners can make informed decisions. She lives in Shaker Heights, OH with her husband Ralph and enjoys golf, curling and walking in Cleveland’s fabulous Metro Parks.