Business Budgeting or Where are you going in the next 12 months?

Federal budget time is a good time to schedule doing your own business’ budget. While the Government’s probably took months to prepare, most small businesses can get it done in under an hour.

Really, it’s not the onerous event most owners think and it can provide you with so much value as a benchmarking tool to measure your business’ performance and manage expectations. We really don’t know how any business manages without one. For us, it would be like starting out on a trek without a destination in mind. It isn’t going to end well.

Now the key to speeding up the process is to realise that you don’t need to do this exercise line by line. As far as the expenses are concerned, about 80% of the expense lines won’t have changed much from last year except for a bit of CPI. We have seen some very complicated spreadsheets that would scare even the most seasoned of us but a similar result can be achieved with a simpler approach.

The key things to pay attention to are the big items; your sales forecast, your wages cost, cost of goods/sales (as applicable) and then any additional investment in growth, like marketing, staff, IT etc.

Once your March quarter accounts are complete, you have all the information you need to do your budget. To get started you can simply export your P & L into an Excel spreadsheet from your accounting software to have a ready-made and perfectly tailored structure to complete your budget.

For the full how-to on creating your budget click here.

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