Planning your budget will enable your business to thrive in any market
LET US MANAGE YOUR BUDGEt
Budget. Budgetary analysis. Budget modeling. Doesn’t this just get you fired up? No? Maybe that’s just us.
Savvy & Suite understands the importance budgets play in your business and can stress this to you, building on our years of expertise.
Now that you’ve developed a solid foundation of bookkeeping fundamentals with our help, it’s time to use additional tools that are at your disposal to fine tune your business machine.
Budgetary tools just help sharpen your business acuity, allowing you to be one step ahead of unforeseen trends or negative circumstances that arise out of potentially flawed business process execution.
What is a reliable budget definition? A budget is a plan that outlines exactly what you anticipate your income and expense activity to be over a certain period of time (presumably whatever period you choose).
Budgeting for your business gives you the ability to set goals that are readily measurable, unlike many goals that we set for ourselves.
Because budgeting is so numbers-reliant, it’s easy to refer back to the budget and see exactly how we achieved our goals, or more importantly, why we didn’t!
This is no clearer than in a budgeted income statement, a financial statement that serves both a forward-looking and backward-looking function if you utilize the tool correctly.
This statement can be used to forecast your next month’s activity, giving insight to whether business processes need to be tweaked in order to meet budget management goals.
Once the period is complete, it’s simple to compare your budgeted income statement to your actual, noting variances along the way.
This gives you the opportunity to understand what happened and why.
It’s also incredibly important to potentially budget against your balance sheet.
Perhaps the most common example of this is a cash budget, but there are various other balance sheet accounts that could be beneficial to provide a budget for.
This could include the amount of Accounts Receivable you anticipate booking this month, showing the potential for revenue from jobs in that period.
Budgets serve as excellent benchmarks, not just limited to income statement accounts. In the liabilities section, it may be useful to budget just how much you’ll draw on a Line of Credit.
This will aid in potential cash flow budgets and later, will allow you to see whether you need that draw or not.
One of the pivotal factors in the budgeting process is the idea of budgetary consistency.
Without consistency, a budget is going to fail. Think of a budget as your monthly workout.
Do you expect to get results at the gym without consistently working out? Of course not!
The same holds for your budgeting process.
By utilizing monthly budget techniques on a consistent basis, you’re more likely to see changes and improvements in your business processes, improvements that may not have occurred without the use of this simple tool.
Want to drill even deeper into a certain area of your business?
Budgeting is a useful way to achieve this goal. With our tailored budget approach, you will be able to dive deep into your numbers.
Take, for instance, your budgeted amounts regarding anticipated supply expense.
You set your monthly supply expense budget, then revisit this amount after the monthly period has ended.
If your actual supply expense exceeded your budgeted supply expense, you’d want to know why.
Because you have a benchmark through the use of previous budgets and the comparison of previous budget to actual, you’ll be able to determine if the fluctuation was solely due to circumstances out of your control or if your business operation processes need to be tweaked in order to run more efficiently.
This analysis would not be possible without the use of a budget.
Budget flexibility is also a major strength of this area.
Because goals merge or change over time, it’s important to determine exactly what your goal is as far as setting your budget.
For instance, if your goal is to create a cash budget for your business, aiding in the creation of a “rainy day fund”, this entails different budgetary restrictions as opposed to a business that is trying to pay off debt.
Even so, the flexibility to transition from one goal to another using budgets will allow you to see firsthand which areas of your business need addressed in order to achieve those goals.
Without the budgeting process, it may take much longer to observe problem areas.
Budget analysis is also helpful when looking at year-over-year results.
Because budgets are relatively consistent, it is easy to compare prior budgets with current budgets.
Comparison will allow lagging indicators to rise to the surface, also providing context for why events happened the way they did.
None of this would be possible without the extensive use of budgets, but another example of why something so easy should be used so heavily.
There are various budget models, but it’s once again important to understand your goals and manage your budget to achieve those goals.
It’s easy to get aggressive and overbudget, but does that tactic really provide insights into your business functions?
Does that create a frame of reference that can be looked back upon if your goals change?
If the answer is unclear, it may be necessary to revise budgetary policy to better align with goals.
Do you not know where to start in the budgetary process?
We are well-versed in the creation and implementation of a budget.
From a simple spreadsheet budget to more extensive, technology-driven budgetary software, we are ready to partner with you to create a planning tool that can immediately reap rewards.
We can also work with your accounting or bookkeeping software to add budgetary capabilities, making it fully automated and able to be changed in an instant.
This is another tool in your toolbelt of business acumen, providing in-depth knowledge about your business.
Savvy & Suite is also fluent in deep analysis, helping you synthesize information that is not readily apparent.
Whatever your budget needs, our trusted advisors are here to serve.