Hello 2020 and hello to our budgeting blog! Most businesses will look at their budget depending on when their year starts, we thought January would be a great time to share some of our thoughts on planning, where/when to spend and looking at the year ahead.
So….where do you start?
A good place would be the previous 12 months, by month, turnover and profit. Right now, these are just figures but we would then put them into context. E.g. why was June such a large month for example – what happened, will it happen again in the next year or was it a one off? Is there a particular month that didn’t do so well and why was that?
A terrifying word for some but all it is an educated guess at a given month’s turnover and profit. Things to consider are: future trends, specific industry or market knowledge and events throughout the year that could potentially produce incremental revenue but take staff away from the business.
Once you have your months, your context and your forecast, the next step is adding your yearly goals to your budgeting – what do you want to achieve over the next year? Do you want to invest in property/assets? Perhaps you are considering taking on another member of staff? How and when is important here, firstly, are you able to financially reach the goals you want to and if the answer is yes then when do you intend to do that by?
How to slice budgeting
In this blog we have suggested a very linear way of budgeting. Everyone is different, it’s important to find the way that works for you. Some people like to work backwards, start with a yearly figure and then work out what they need to do to get there. Say you wanted to double turnover for the year vs last year. How many more clients would that mean and can you manage that additional work with your current team? Suddenly you can begin to see what you need to get there and whether that is achievable or not.
If you would like any help with budgeting or understanding how this can help your business, please get in touch with our wonderful team.