As a business owner who wears many hats, you are faced with the difficult task of how to best allocate your time.
There are a few budgeting tips for businesses that could help save your most valuable asset – your time. The last thing you need is to spend hours and hours in boring financial budgeting meetings. Instead, you should be spending your time growing your Company’s sales.
Here are two simple and complementary tips to use to gather valuable insight into your Company’s financial position in just minutes.
The first budgeting tip for businesses is an annual profit and loss budget. Most accounting packages have this simple capability. Do the best you can to forecast what your year will look like and be conservative. Try not to forecast big jumps in sales unless there is a compelling reason to do so.
Add a 10% cushion to your budgeted operating expenses. On a monthly basis, press a few buttons in your accounting package to produce a “Budget vs. Actual” report with percentages. Now, you can quickly tell where you stand with respect to financial performance and easily see which expense accounts you need to focus on.
The second and complementary tool is a cash flow forecast. If your accounting software has this capability, then use it. If it does not, then create a simple Excel template. On a weekly basis, you want to map out what you think your cash receipts will be minus the cash you will pay out. Feel free to map out as long a period of time as you like. My preference is one year. Now, you will know exactly when you might experience a cash shortfall. In the event of a potential cash shortfall, the benefit to you is that you will know exactly when it would happen and have ample time to deal with it; instead of experiencing a “cash emergency.”
These two simple tools should take you no more than 30 minutes per week to review. They will go a long way to reducing your stress level and remove any doubts from your mind about your Company’s financial position.
Remember, running a business successfully does not need to be complicated. Keep it simple!
Join our email newsletter to stay tuned for details on our upcoming teleseminar for small business success.
Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at firstname.lastname@example.org.