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Mind Your Own business

with Tips for

Building Your Budget


It is true that a budget is about numbers, but it is really so much more…

it is the financial expression of your plan for the coming year. 

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Before deciding that a Budget is just too much trouble, consider the following:
 

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  • A budget provides you with an estimate of the approximate revenue you will generate, as well as how much expenses are likely to be.
     
  • It provides you with a forecast of what to expect, month by month so that you can proactively manage your resources.
     
  • It’s the plan for the year that sets goals for sales, production, spending and everything else that goes with a business. Best of all, actual results can be compared to budgeted results, offering the opportunity to either stay the course, maximize outstanding results or react quickly to unexpected downturns.
     
  • A budget highlights markers pointing to possible cash flow management issues. 
    With a budget, you can see it coming and make appropriate adjustments.
     
  • To secure financing, your lender will insist upon reviewing a budget.

 

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The list could go on and on, there are so many reasons why a budget is a ‘must do’ for every business, but let’s move from the ‘why’ to the ‘how’. Here is an achievable plan for building a successful 2018 Budget and Plan:


1.    Keep it simple:  Remember every budget has 3 basic categories:

                             Revenue – Expenses = Profit. 

                             That's all you really need.

 Need a more detailed example? View the  FULL "Mary Colette's Happy Garden" Budget!

Need a more detailed example? View the FULL "Mary Colette's Happy Garden" Budget!

2.    Build on what you already have: 
 

  • Begin with the financial recordkeeping you used for this year in order to begin planning for next year.
     
  • Start by looking at this year’s results so far. Is profit where you want it to be?  If not, what is a reasonable expectation for what profit you could earn in the upcoming year?

     

3.    Make a plan:
 

  • Work out how much revenue would have to increase in order to reach your profit goal.  What specific steps will you have to take to make that happen? 
     
  • Think through every expense, including the expenses that will be needed in order to achieve the new revenue level. Are there any you could reduce by shopping around or by implementing operating efficiencies? Have you listed every expense? Add a little extra for unforeseen circumstances.
     
  • Share the plan and your preliminary budget with your employees. Listen to their comments and make changes as appropriate.

     
 Need a more detailed example? View the  FULL "Mary Colette's Happy Garden" Budget!

Need a more detailed example? View the FULL "Mary Colette's Happy Garden" Budget!

4.    Complete the spreadsheet:
 

  • Determine in which months you could expect how much revenue to be collected
     
  • Determine in which months you could expect to pay which expenses
     
  • Make comments in each category that explain why you expected the revenue/expenses to be what you have projected.

     

5.    Make the budget a living document:
 

  • Use the expected results of the budget as the company’s goals.
     
  • Announce these goals and your plan to your employees.
     
  • Complete a monthly check-in of the budget vs. actual revenue/expenses.
     
  • Discuss the results with your employees or board of advisors. Are you on target, meeting your revenue and expense goals? If yes, how can you maximize these results?  If not, how can you get back on track?  Have circumstances changed so much that you need to adjust the budget moving forward?

 

Following these 5 simple steps will arm you with an exceptional tool to improve your business for the upcoming year.  There is hardly anything more foundational to your 2018 success than a well thought out budget. Make the commitment to yourself and your company to prepare and follow a budget.

 

If you:

  • need help getting started or
  • would like to review this information one-on-one with us, remember...

 

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the first session is free!

 


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if you need any additional advice,

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