If you only do ONE thing for the new Financial Year… Start a BUDGET!
Budgeting is absolutely the best way to improve your business profits and overall business value next year (and the year after, and after that too).
Almost everyone knows that the best way to succeed is to set goals and work towards them; say what you are going to do, do it, tell everyone what you did, then enjoy the accolades… Budgeting is exactly that for your business.
The trick to being really profitable in business is setting goals and working towards them:
- You decide what the business is going to do; make the business plan (sometimes called a Business Strategy)
- You map out in money how the business is going to do it; make the budget
- You do what you planned you would; run to plan
- You report what you have done; do the tax return
Think of your Budget like a NaviMan (that electronic thing in the car that shouts directions so you don’t end up cross and lost). A budget is just like the calculated path your Naviman creates after you enter-in your destination.
i.e. Firstly you decide a destination then the Naviman plots out how to get there – your budget is exactly the same thing – a map of how you intend to reach your intentions.
Simple? – yes!
Boring? – maybe to you right now, however once you see the results budgeting becomes very empowering
Profit Tip for 1 July: Do A Budget
Getting your budget done is as simple as:
STEP 1 – Gather your Budgeting Calculating Ingredients
STEP 2 – Write down your Future Plans
STEP 3 – Sort out your Future Plans into Budget Headings
STEP 4 – Apply the dollars to your Budget Headings
STEP 5 – Do a Profitability Check
It doesn’t have to be complicated, or maths-ey! Even if you only write down 5 lines – one for income and four lines of expenses – you are starting a budget you can work with… All you need to do after that is to check your progress towards the goals (preferably weekly) but monthly will do, you will probably surprise yourself with the improved business and profits that result from just keeping your eyes on the prize!
This time of year Newspapers are reporting “30 ways to get ready for year-end”
“Do this quickly” “Hold off on that” “Pay some things now and other things later”…
Same old, same old! I never understand why these articles focus on last-minute rushing around – perhaps this is a “slow news” time of year? So, consider spending the same amount of time and effort lining up your ducks instead – review (or build) a budget. A really good, really useful budget.
By all means go off to hurry about adjusting this and that; remembering that for the most part the suggestions have a significant impact on your cash-flow – any consideration of which is usually omitted in these Tips, even from their disclaimers. But also give budgeting a go, HAVE A PLAY, get a taste of the new power at your fingertips and grow your skills from here.
Think you’ve got an Excuse?
I have heard every excuse under the sun! Here are some responses to the main ones
- “I don’t know exactly what is going to happen next so how can I plan?” – it doesn’t matter; put down what you would LIKE to happen – the benefit is a very clear way for you to establish your measures of success for the year to come.
- “But my plans may change during the year!” – never mind; you can adjust your budget to reflect new goals or challenges – the benefit is you can also clearly see the impact and outcomes of these changes and when, where and how to make management decisions to stay on track.
- “What if I get it totally wrong to start with?” – all the better; the benefit is you will learn more about your business is actually doing, instead of acting on what you assumed your business was doing.
- “I don’t want to look foolish!” – go right ahead and keep your initial budgeting drafts private; if only for a while. Eventually you will want to follow best practice and create your budget and plans involving your team, and maybe even your customers and suppliers. Start by building your confidence and skills first and keep it close to your chest if you like (just make sure you still peek at it often), then no-one but you will can judge how well you are going.
A budget should enable you to make more profitable decisions more quickly and easily
– if it isn’t doing that then your budget is a hindrance not a help.
What are your Tips for 30 June?
(share in the comments at the bottom of the page so everyone benefits)