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. Here are the top six most important things to think about when building a budget.
- How will revenues 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?
- Will we be hiring or firing any people over the next 12 months?
- Will we be making any changes to our day-to-day operations, moving to a new office space or buying more equipment or furniture?
- 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.
- What other major changes am I making or will I be making to my business?
- Are there any goals that 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.
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 month, you are ready to get started on your budget
in AutoCFO! Here’s a quick how-to guide on how to create your budget