Forecasts and Budgeting for Success
Most of us are all well back into the swing of things with our businesses after a relaxing Christmas and New Year break. These breaks are a good time for a little self-reflection and review of the calendar year just ended. From this, many of us review our business strategy, and do some goal setting for the next year ahead.
In reality though, many of us fail to follow this through by properly documenting these goals and objectives, assigning them to a specific person for accountability and measuring them (think of the S.M.A.R.T acronym – Specific, Measurable, Achievable, Relevant and Time-bound).
From a financial perspective, with the end of the financial year approaching for most, now is the time to put these goals and objectives into some financial forecasts which the business can plan around for the year ahead. The best way is to produce profit & loss and cashflow forecasts to help you plan for the ups and downs of the year ahead, lending requirements, and/or plan for growth. But most importantly, they are designed to ensure you meet your long-term strategic plans.
After the forecasts have been finalised, the figures can be utilised as a budget and loaded into Xero on a monthly basis. So, each month you'll be able to track your actual monthly revenue, expenses and net profit results against the budgeted figures so that the business's financial performance is related back to your original goals. Tracking, assessing and reporting these results brings greater accountability and dramatically increases the likelihood of achieving your goals.
To discuss the practicalities of forecasting and budgeting, contact the Finman team now to get started on (04) 298 2551.