Budgets can feel like a chore or a forgotten item on the to-do list when you are caught in the throes of running your business. But, how often do your goals come alive if you don’t have a plan or if you don’t measure your results? We view the budget as a living, breathing progress report where you can see your business’s plans coming to fruition and more importantly, see when you need to adapt.
Tips on making your budget goals come to life:
- Prepare a Profit & Loss by month for the current year. Export to excel.
- Look at trends
- Highlight seasonal changes
- Take a close look at a recent month that is representative of current Income & Expenses (often November and December have unusual expenses and/or income)
- Do you expect revenues to be the same, grow at a steady rate or have seasonal peaks and valleys?
- Enter sales for next year by month on your spread sheet, based on your insights from your review of this year.
- Adjust sales for new products and new clients.
- Cost of Goods/Materials – Is there a % of sales expectation?
- Employee costs & payroll – How many bodies to you need to make your sales budget?
- Other fixed & variable costs
- Fill in your expectations for the next 12 months
- Are you making at least 10% of income?
- Adjust income and expenses until you have a viable profit to sustain your business.
A LOT can happen daily and weekly in your business. Look at your budget often and make corrections quickly before you are way off course. Assess your progress of planned goals versus actual results on a weekly basis.
- Set small goals each week that will help you achieve your budget such as blogging weekly or improving customer satisfaction by initiating a new idea.
- Are expenses higher than expected?
- Is my Profit Margin on track for a successful year?
- Adjust your budget to reflect the realistic state of your business as needed.