January is a good time to consider what’s ahead for your business – whether you want to expand, diversify or continue to operate smoothly – and a large part of being able to achieve your New Year goals is having a solid business budget in place. Creating a budget is an essential but often daunting task; so with that in mind we’ve compiled some simple, achievable business budgeting tips for the New Year to get you off to the right start.
Understand your business goals and objectives
Setting goals and objectives is an important first step which helps you to understand your business’ vision. Clearly identified goals allow you to develop an achievable and realistic business budget.
Learn from last year
When you’re starting your business budgeting for the year, take the time to analyse your successes and failures from the previous 12 months. Not only will this give you a clear idea of where you stand financially and allow you to make informed estimates for the coming year, it will also allow you to see what worked for your business budget and what didn’t so you can adjust accordingly.
If this is your first year of business budgeting, do your research and look at other businesses’ budgeting decisions. While no other business will ever have the exact same revenue, cash flow or needs as yours, there will be enough similarities in size, location and expenses for you to make a strong start.
Be structured, but also be adaptable
Begin by asking yourself a few basic questions, and setting out the figures in a spreadsheet:
- What are the realistic projected sales for the business budgeting period?
- What are the direct costs of sales, such as materials, subcontractors, or insurance? This is a good point to shop around and make sure you’re getting the best deal for your business.
- What are the fixed operating expenses, such as salaries and wages, rent and utilities?
- Once you’ve checked and double checked your figures and worked out your predicted revenue, remember that no budget is set in stone. Your budget will guide you through your spending decisions over the course of the year, but nobody can predict exactly what will happen. Leave yourself some wiggle room by making conservative estimates, and always have a Plan B ready – both for making less revenue than predicted, and for making more!
Business budgeting can be overwhelming, but your initial budget will be an invaluable tool that you will use again and again throughout the year, checking whether you’re on course and readjusting against when necessary. If you’re struggling, consider using pre-set templates, online budget calculators, or even seeing a financial consultant to ensure you get your business off to the right start this year.
To do your business budgeting for the New Year – and do it well – will take time and effort, but you’ll be grateful for it in the long run. If you need extra help, contact the accountants at The Quinn Group on 02 9223 9166 or make an online enquiry – we can help you put a business budget in place!