Budgeting Made Simple for your business
With the start of a new year, many of us made resolutions for the year. These resolutions represent goals we want to achieve. Ways we want to improve our lives. A budget is a New Year’s Resolution for your business. if you haven’t developed one for your business, it’s not too late to do that.
Budgeting Made Simple – Setting goals for your business
A budget is something you should have in place to start your year. Starting the year without a budget is like starting on a trip without a map. You may see some interesting things along the way, but you most likely won’t get to your desired destination. Anything worth doing is worth doing well. Don’t operate your business and hope for the best. Develop a plan for the year.
Budgeting Made Simple – The major areas of your business need to be included in your budget
Everything you want to be sure will happen should be reflected in the budget. All the major areas of your business should be addressed in the budget. This includes a plan for revenues and expenses. After all, you want to be sure that you plan to have profits and a positive cash flow this year.
Budgeting Made Simple – Where to start?
The obvious place to start is with the plan for sales for your business. I know you don’t have a crystal ball, but you can make some educated estimates based on historical trends. What do you expect from your clients this year. Will you sell more to them? Less? And what about your targets for new business this year? What kind of revenue will they generate?
Budgeting Made Simple – Fixed Expenses
Some of the costs for your business are fixed. These are an easy place to start. You already know the amount and the timing of these expenses. So let’s plug them into the model.
Budgeting Made Simple – Variable Expenses
This one appears to be more difficult, but you can do a good job of estimating here based on historical trends. You can even get the seasonality (if any) this way. Don’t forget to estimate any costs associated with the new clients you plan to add this year.
Budgeting Made Simple – Backed up with an Action Plan
Just as with a goal, you need an action plan to support the goal and help you accomplish it. Develop action plans for each of the major items identified through the budgeting process. How will you get those new clients? Networking events? Referrals from existing clients? If you haven’t thought about this, what are the odds that you will be successful. Let’s stack the odds in our favor with an action plan that you can execute this year.
Learn more about budgeting from Mark Crowley, a partner with B2B CFO®. You can reach him at 248.765.0109 or MarkCrowley@b2bcfo.com.