Establishing a Better Business Budget for 2019
The end of the year has arrived, and as any business person knows, that means establishing a concrete budget for the coming year. For those that aren’t as familiar with it, budgeting is like a business’s central nervous system. It’s a strategic tool to assist in making better spending decisions, identifying areas for improvement and maintaining a company’s financial well-being throughout the year.
So, where do you begin when building your yearly budget for 2019? We’ve got a few tips to get you started.
Build on the past
What happens in the past shouldn’t always stay in the past, especially when it comes to business. Your budget should lean on how your business has performed over the last few years. If possible, pull the results from the previous five years to help inform your projections for the new year. Past performance can help you establish a concrete basis for your new budget.
Your budget must be attainable. If not, you’ll only set your company up for failure. While analyzing your last five years of reports, look for certain factors like fixed costs, one-time expenses, areas for improvement or wiggle room. These factors can help you create a realistic budget that fosters healthy growth.
Flexibility is necessary
Your budget isn’t meant to be fixed. It’s okay to amend your projections throughout the year based on your business’ performance. In fact, you should be looking at your budget and modifying it frequently. This allows you to be informed of your company’s performance and financial well-being. Plus, if you are in danger of going over your established budget, staying aware of changes can help you turn things around earlier in the year.
Details are key
Don’t overlook the little things. The more detailed your budget at the beginning of the year, the more successful it will be. For example, instead of having a line titled “Employee Benefits,” try breaking down this category into several sub-categories like “Health Insurance, 401K, Paid Time Off.” These details can give you a much-needed view into the granular costs of your business, leading to insights into opportunities for financial improvements.
Use reliable tools
You don’t have to plan your budget with only an excel sheet as your guide. Most accounting software has budgeting tools built-in and ready to go. Utilize these tools as you are building your yearly budget. Plus, these tools can also link to previous year’s performance, leading to increased efficiency.
Stay on top of it
Your budget isn’t done when you finish the last projection. It’s important to constantly monitor your finances throughout the year to ensure you are staying within your projections. It also allows you to make necessary adjustments.
Utilize your staff
Several minds are always better than one. Open your budget up to your employees and ask for their feedback. They might see a hole you couldn’t originally. Plus, your employees might have insights into their specific departments that can help create a more well-rounded and detailed budget.
Partner with the best
If budgeting yourself seems daunting, consider partnering with a business that specializes in this area. They can help you year-round and take some of the burden of the business off your shoulders, so you can focus on the day-to-day operations.
Ready to learn more about business budgeting or need some expert guidance? Contact your local TAB owner today!