Budgets are more than just financial numbers in business. They are an important tool for providing information necessary to the running of your business. It allows you to clearly see what money is coming in, going out and where you can invest. Without a budget, you won’t appreciate or have a full understanding of your numbers which can be the hurdle stopping you from growing your business.
Here are our top tips on how to stay on top of your annual budget.
Plan A budget isn’t there to manage every single penny. It is designed to ensure there is always enough money for all the things we need to run our businesses effectively. It also allows us to look at future purchases and expenditure to grow and develop our businesses. Once you have created a budget, you can start to map out future purchases and forecast what sales you need to achieve to keep your budget on target.
Be realistic When creating your budget, it’s important to ensure it’s realistic. The best way to do this is by looking at past income and expenditure for the last few years. Start by analysing the results; what costs are fixed and inevitable? What things are likely to fluctuate over the years? Are there any plans for growth, ie taking on additional staff, that could impact on your budget? Using past results will help to create a realistic budget that’s easier to manage.
Know your business Do seasonal changes have a significant impact on your business? Do you find at certain times of the year things are very quiet or much busier? These are things that need to be factored into your budget. If you find the summer holiday period is quiet for new sales/leads, you could consider reducing your marketing budget for this period and investing more time and money after the period when things pick up again.
Prepare for the unknown As much as we can plan, there will always be factors of the unknown that we need to cover for. Changes in the economy, equipment failure, staff turnover; having a contingency in place for unexpected elements will reduce the impact if anything arises.
Adapt As with anything in life and business, you need to be able to adapt when needed. It’s the same with your budget. Rather than wait until the end of the year, revisit your budget regularly to review where you’re at and make any adjustments needed. You may find you need to tighten your belt or actually you have additional expenditure you can use or invest into the next financial year.
Analyse Once you have come to the end of the financial year, it’s time to carry out an analysis of your expenditure throughout the year. This will help you to develop your future budget. Are there things that you can cut out? Are there alternative options available at a reduced price? Do you need to bring in more sales? Has your turnover increased allowing you more finances to invest?
Don’t like managing the numbers? Remember you can always ask for help… It doesn’t matter whether you currently have a budget or not, if it’s in the positive/negative or you aren’t sure how to manage it effectively, here at VASS we can help. We support our clients in managing their budgets effectively, taking the stress and hassle out of worrying what money goes where and how best to keep track of your numbers.
Want to find out more? Why not arrange a free no obligation consultation by calling 020 3370 4075 and find out how we can take away the stress of managing your annual budget.