Are you worried where your business is going?
Back in October I wrote about how strong planning gives you budget flexibility.
I wasn’t surprised to learn from some of my readers that they had
- Never had a business budget, or
- They had a budget, but they used it at the beginning of the year and only reviewed it when cash was tight.
If you are one of those readers, I must tell you straight. You are doing yourself and your business a disservice. Your budget is one of the most critical tools you have as a business owner to forward-plan, manage the current and learn from the past.
It’s easier than you think – start here
If you are in camp A – without a budget at all, the quickest way to get started is to run a profit and loss report for your last financial year. This will give you last year’s income and expenditure under each of the relevant headings. Download it to Excel, change the dates and upload it to the budget manager in Xero. It’s ridiculously quick and easy.
Reality vs expectation
Now you are ready to compare what happened last year to what is happening this year. You can adjust your numbers to see what will happen in the months ahead.
Tweak your numbers until you have what looks realistic. Remember to consider major events or changes, such as large capital purchases, staff changes, recruitment costs, R&D investment, etc.
One of the most powerful reports in Xero
At a meeting with other accountants recently, I was surprised to learn how few of them use what I consider to be one of the most powerful reports in Xero (and there are a lot to choose from!). This is not a secret ‘accountants only’ tool – this is available for all Xero users. In the video below I explain what it is and how you can use it now to help you manage and flex your budget.
As soon as you get started with your budget you will see how much control you can have. This is one of the first steps we take with clients who choose our business performance services. The results are phenomenal. The process gives the business owner:
- Instant visibility of their current position
- Accurate predictions of what to expect going forward
- Simple, effective and strategic business decision making framework based on facts
- An early warning system for potential issues
- And so much more…
If you are interested to learn more about how our team can help you regain control of your business (including your budget) give us a call on 01923 800444.