Time to Tackle the To-Do List?
There are things we all avoid. Overdue medical bills, mowing the lawn, laundry, maintenance on the car. These are chores— things we know we have to do but don’t want to get around to. Usually, they involve painful or unpleasant experiences. Hanging out at the dealership for 2 whole hours with terrible WiFi. Folding the same clothes over and over again. Pulling the lawnmower out from behind the car and 2 tricycles. Did I mention cleaning the garage?
Whether you love it or hate it, budgeting is extremely important for all types of businesses. The key to successful and accurate budgeting is to not forget anything. What’s the best way not to forget anything? Have a checklist. When you use a checklist, you limit surprises and help ensure you didn’t forget anything during the budget building process.
How much time does it take to answer a “simple” question like, “What was our revenue for X customer last month?” I once had a private equity investor grumble at me with a tone of complete and utter annoyance. He had asked one of our portfolio company’s controllers that question and received the response, “Can I get back to you on that tomorrow?”
Why do businesses hire a CFO in the first place? They typically hire a CFO in order to get clarity on what is going on in their business financially. The CFO is able to perform analyses and act as a translation tool between the numbers and the operations of the business.
The internet makes Key Performance Indicators (“KPIs”) seem like the gold pot at the end of the rainbow of business management. And thus these metrics are shrouded in so much mystery that the search for the perfect KPIs becomes an unachievable quest. Let me part the clouds of mystery for you.
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.
Tax season! Personally, it is not my favorite task. I love spreadsheets and financials and numbers, but I do not like doing my taxes. Tax season is also that time of year where we all take a hard look at how we did last year.
– Did we hit the revenue goals that we were expecting?
– Did we achieve the cash flows that we were planning on?
– Are we going to make a contribution to our 401(k) this year or defer that decision another year?
– Did I make enough money to make a withdrawal or pay myself a little more?
I talk to business owners all the time who have heard that building a budget is a good idea, but don’t have a budget. Here are the three main reasons I’ve heard as to why this is:
– I’ve never built a budget and wouldn’t know where to start.
– I’m not a big numbers fan or I don’t like Excel.
– I’ve done one in the past, but never ended up looking at it so it seems kind of pointless.
Have you ever opened the financials for your business and immediately felt overwhelmed? So many numbers, no point of reference, and 5-10 clicks to find the data you actually need. Not fun! See how AutoCFO can help you wrangle your data as if you had a team of financial analysts on your side!
It is one thing to grow a business, and it’s another to grow a financially resilient one. The fact that you’re reading this article tells me that you’ve already set yourself apart from the pack by knowing that “growth” and “resilient growth” are not one and the same…