The majority of business owners we work with do not like budgeting.
Whether it is because of a lack of excel skills, understanding the construction of how Profit and Loss or Cashflow statement are compiled or the fact it can be boring budgeting on your own!
However, budgeting is revealing and a necessary exercise. It is important that we take the time once a year (or more) to understand our “Breakeven Point” and visualise what our personal and business financial goals are, where we currently get our business from, where the future opportunities to expand our revenues lie and how we get there!
Importantly, scrutinising the expenses is equally important and extremely revealing. Like your home, we accumulate “stuff” that one day we will use….but never do, isn’t that true of most of us?
Well our expenses can be exactly the same, we take a close look at our Utilities, Internet and Phone accounts, Subscriptions, Freight and Insurances, to name a few, and very often realise that they are either not fit for purpose or far more expensive than we need in our current business environment.
Additionally, it is the time to scrutinise you supply arrangements, should you be paying cash or be on account, what difference will this make to your cashflow and are there more reliable and reasonably priced suppliers out there?
We cannot stress the amount of money and efficiency we have saved clients over the years by having an annual audit of their procurement and expenses, questioning why we have the cost, what the benefit of the plan or subscription bring to me or the business etc
The perfect time to look at the budget is NOW! Our suggestions for a successful budget session are;
-Arrange the time in an uninterrupted environment
-Get a trusted “Buddy” (advisor) next to you to question you, as to WHY you have, the costs and can you get a better deal.
– Document any assumptions for changes to your Sales and expenses
– Commit to revisit the budget every month to see if you are on track
Get it knocked over at the beginning of the financial year….you won’t regret it!