Building a Budget for Your Business
Over the years, I have built hundreds of budgets and projections for businesses (yes, that many!). After the first 50 or so, I found myself asking a key set of questions. Next time you create a budget or forecast for your business, ask yourself the following questions.
6 Things to Consider When Creating a Business Budget
1. How will revenue this year be different from last year?
Make sure to consider what’s happening to other businesses in your industry. Is there a slowdown on the horizon or are things booming?
2. Will we be hiring or firing any people over the next 12 months?
If your business is growing or your staff is spread too thin, you may be adding team members.
3. Will we be making any changes to our day-to-day operations, moving to a new office space or buying more equipment or furniture?
If you think you’ll be moving into a new office space, do some research to see what rent is for spaces that are the size you may need.
4. Will our customer profile or product mix be different this year?
If so, take a close look at your more recent month gross profit margins to see if the new customer or products are more or less profitable.
5. What other major changes am I making or will I be making to my business?
You know your business best. Think ahead to the future, are there any big changes that you’re gearing up for?
6. Are there any goals I would like to set for myself this year?
Goals can be anything from faster customer collections, more cash, higher revenue, or a tighter rein on expenses.
Now It’s Time to Build Your Budget
With the answers to these questions, you can take the information from last year’s actual financials and use that data to build a picture of how your business will look this next year. Once you’ve made a list of all major changes in your business for the next 12 months, you are ready to get started on your budget in AutoCFO!