Planning for growth, profit and cash flow for you and your business
Budgeting and forecasting revenue and expenses, as well as capital expenditures, for your business are essential ingredients to profitably taking your business to its next level. It is also necessary if you want to:
- Build a strategic action plan for your business
- Set your pricing strategy to maximize profit
- Set your staffing requirements
- Set incentive targets for your team members
- Plan your earnings as the owner of the business
- Plan for your retirement as the owner of the business
- Increase profitability
- Increase cash flow
- Borrow working capital
How can having a budget and a forecast help in all of these areas? Simple: when you’ve got a well thought our financial plan … you’ll make better and more informed decisions every single day.
Setting Your Financial Goals
Budgeting is a way to practically set your financial goals. Budgeting is typically done on an annual basis; and then, forecasting is done, monthly or quarterly, to measure how actual results and real time information is affecting your company’s ability to achieve its budget. The key ingredient to building a realistic and achievable budget, is to make sure that you’re properly accounting for your business each month; and that you review an accurate Profit & Loss Statement and Balance Sheet for your business each month. These will provide the basis for your annual budget.
There are 4 major segments to basic annual budgeting that will simplify the process for you:
Cost of Sales
Breaking these segments down on a monthly basis will help you make the budget more useful and motivating for you and your team. We’ve found that starting the process by budgeting monthly Fixed Expenses using your prior year actual results is a great way to get started.
Remember that setting your budget is the first step to achieving your goals for the year. The second step, planning what actions need to be taken to achieve the budget, is just as important.
For a complimentary session to show you how to build a budget and a forecast system for your business that is easy to maintain and understand:
- Call us at 203.210.7003.
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