Now that Christmas, New Year Resolutions, credit card bills and tax payments are out of the way, many of our clients use February/March to plan their business activity for the next financial year – setting a budget.
It’s not just the big multinationals that do this, after all a budget is just a plan with numbers to show you what success looks like.
Warren Buffett the world renowned investor has two golden rules of business success
- Rule Number 1 – Never lose money
- Rule Number 2 – Never forget Rule Number 1
So how do you, as a small business owner, ensure that you adhere to this very simple strategy?
The first step is to invest some time. Reserve a day in your diary and use it to complete a review of the current financial year. Who are your customers? Will they change next year? What do you expect them to buy from you? What are your big cost items? See where you can get better value, make time to collect alternative insurance quotes for example. Do you have any one-off costs coming up say vehicle renewal or major machinery servicing? What other unusual events do you need to plan for?
Use this data to build a monthly income and expenditure summary – you’ve got your budget!
Now use it to compare to your actual performance through the year ahead. You will soon see where gaps are forming and you’ll be able to act immediately to prevent a crisis. Share it with your accountants and your bank – they will be impressed how professional and confident you are. Nobody understands your business the way you do so make the most of this knowledge to beat the competition.
If you need any more advice about preparing a budget, please contact us.
This column is written by Jacqui Wingfield and Deborah Garvey from About Accounts. If you have any questions you want answered in future columns then please contact them on 01494 520801 or email@example.com.
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