Are you creating your small business budget for 2015? We have set out some of the key steps to help you achieve success as you map out the year ahead:
As a tool for goal setting and accountability, nothing beats having a budget. But what is the purpose of your budget? It really comes down to financial goals for the year ahead and how you will allocate resources within your business. It’s amazing what you can achieve if you know what you need to do to make things happen.
Know why you have a budget and how it will be used over the coming year. It means the effort you put into creating your small business budget will pay dividends.
The biggest reason we see small business budgets fall apart is that there is no connection between their business numbers and operations! Simple. Its easy to forecast what the numbers can look like in a perfect world. We all guilty of that in one way or another. But it is harder to play with the numbers when you need to think about your operations. So what does this actually mean?
Let us an example of an online business that has some customers and is looking at expanding to making $20,000 a month in sales. It’s easy to say that people will just come to your website and purchase product. But how will they get there? How many will convert into sales? And what will the value of the average basket of goods they purchase be? When we start asking these questions and mapping out what the future operations will look like, it means that you are in stronger position to allocate resources and ultimately work out what your numbers will look like over the next year.
The numbers are a product of your operations. So make sure when preparing your small business budget, you have mapped out your operations and how you see your business running for financial success.
Track your business performance monthly and compare to your small business budget. There are many helpful tools that you can work with including Xero that allow you to track your performance against budget each month. And with up to date numbers that make sense, you can be certain that you are well on the way to keeping yourself accountable.
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