Building a Budget? 3 Must Do’s
It’s forecasting season and for small business owners this can be a tall task. With bills to pay, customers to serve, employees to manage. Forecasting can often take a back seat. Having goals written down, even if they are not perfect can make a huge impact the performance of your business.
Schedule Time to Plan/Review
Complete one quarter at a time. With third quarter planning around the bend it’s important to give yourself three to four weeks lead time. Schedule two half day sessions the first and second week of June. For those of you who have planned for the entire year already (great job by the way) these half day sessions should serve as a review period for 2nd quarter and making tweaks to the existing forecast.
Review Income Statement from 3rd quarter the previous year
Determine revenue achieved previous year and set a realistic goal based on your current growth trend. Realistic means you won’t make expensive inefficient decisions to hit your new revenue target. Once you feel comfortable with your revenue number. Determine how many units, sales, customers you need to close/win each day. These should help provide clarity to your sales force on what a successful day’s results should look like.
Set a Stretch Profit Goal
It’s one thing to set your revenue goal. Setting a proper profit goal is critical as it will force you to make tough decisions in your business. If last year 3rd quarter you produced a 5% net income (profit before taxes). Setting a stretch goal of 6-7% is realistic. Immediately you will need to evaluate your expenses. Is everyone being paid appropriately? What recurring payments can we get rid of? What contracts can be renegotiated to find your extra 2% net income?
Taking two half days a quarter can make all the difference in the world when it come the financial health of your business. Start winning today by putting these time blocks on your calendar. These planning times are non negotiable.