Chances are, like so many others across the United States, your business may have fallen short of budget goals this year. Avoid the red ink and set your budget goals up for next year's success with these three basic approaches and advice from industry leaders.
When you are setting budget goals for your business for the new year, it is important to hone in on where your money is going, and how to maximize your investment. One of the biggest mistakes businesses make is forgetting to incorporate their time into a budget plan.
"Timing underestimation directly increases costs," says James Ontra, CEO of presentation management company Shufflrr. "Not only do you start to lose time to the delivery schedule, your team also loses momentum as their collective thought shifts focus to another project." For example, if you or your accounting team frequently uses up valuable time and resources printing checks, stuffing envelopes, and making trips to the mailbox or post office, it may be time to look into a secure site like Checkeeper that specializes in check-writing and fulfillment services to free up you or your staff to stay on target.
Just as your market will change over time, so should your business plan. While your initial business plan might rely on some assumptions about your target audience and what they need, once your business is up and running, you may discover new factors you hadn’t originally considered, including competitor reaction to your business entering the market. Be sure to incorporate this new insight into your updated plan.
Paul Cho, CEO of Align Income Share Funding, states that "Regularly revisiting your budget will help you better control financial decisions, because you will know exactly what you can afford to spend versus how much you are projecting to make."
Growth can spell budget trouble if it happens quickly and outside of the expected plan for expansion. "So much of business is planning and reacting to the unexpected," advises Doug Keller, financial planner at Peak Personal Finance. "For small business owners, failing to anticipate an expense or its magnitude could prove disastrous and cripple the organization before it has had time to grow. To counteract that, it is important that business owners overestimate expenses and shield themselves. Doing so is a survival tactic that will allow owners to hedge against risk or failure."
Chart your growth patterns, determine which parts of the business are most affected, and alter financial projections accordingly.
Keeping your budget updated is vital because hitting your goals is near to impossible without staying current and responsive. Reflect on past successes and where things fell short to create clear and measurable objectives. By focusing time on projects that matter and delegating the ones that can be handled by outside professionals, letting your budget evolve with changing scenarios, and anticipating growth, your well thought-out budget plan can be the key to crushing it in the new year.