So it’s nearly end of financial year and you start to think, goodness I need to set a budget for next year. But, where to start? It’s quite easy really. The basic template you start with is your current year results. Simply, run a current year profit and loss by month report, export to Excel and you have the beginnings of a new relationship with a budget. Why do I suggest monthly? It is often easier for you to determine next year’s results monthly than a large annual figure. So these current year results are the base of your figures. Now it’s time to analyse each line to determine whether that figure or higher/lower can be achieved this year. Remember your numbers are determined by the organic nature of your business as well as the strategies you put in place to grow your business. Here are few questions you can ask yourself, to kick start your analysis:
Sales – So, what is your marketing plan for 2011 financial year?
- What do you predict will happen to sales because of this?
- Do you have any new product or service launches?
- Are you withdrawing products or services from the market?
- Are their client contracts in place that will cease and not be renewed?
- Will you be opening a new store?
- What marketing expenses will be incurred from this plan?
Cost of Sales – Depending on your business structure, your costs of sales (direct costs associated with achieving sales) will move along with any sale increases or decreases.
Expenses – People (salaries and wages)
- Will you require any additional resources to support growth?
- Will there be pay rises?
Expenses – Location
- Will you have any rent increases? New office, new store?
Expenses – telephone & internet
- Are you on the most efficient plan? Are you paying for phone lines no longer being used? Do you need to review your internet usage and existing plan?
And the list can continue…. The questions can be endless, but ultimately it is you who knows your business best and can determine answers to these questions. If you need help, speak with a bookkeeper or accountant, someone that can think a little bit outside the square to where you think, so you don’t miss anything. By setting up a budget you can then track your progress throughout the year against actual results and see how well you are performing. Great to see if those marketing plan strategies are translating into the budgeted results.
