LOOKING FORWARD TO THE FUTURE
What are your long-term goals?
How will you get there?
Let's talk about strategy and planning.
How will you get there?
Let's talk about strategy and planning.
STRATEGYYOUR GOALS AND WHAT YOU WANT TO ACHIEVE
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pLANNINGPLANS, BUDGETS AND FORECASTING
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What is a budget?
What is a forecast?
how to create a budget
Like a lot of things in accounting, budgeting and how to budget can take many forms. Here are some examples:
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
MONITORINGHOW ARE YOU TRACKING?
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Question 2
Answer to question 2
practical tipsREAL-LIFE EXPERIENCES
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WHAT DO I DO IF I'M GOING OVER BUDGET?
The first thing to do is to be certain that you are going over-budget. Get your financial results up-to-date and run your reports.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)?
can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)?
can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
ADDITIONAL RESOURCESGET EXTRA HELP
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checklist
We spec
resources
Financial i
free resources
There are many b
paid guidance
If anything in this section applies to your business and you'd like my specific help, please go the Paid Guidance section of this website, or contact me via the details below.
LEGAL STUFF
By the very nature of our profession, any advice or guidance given on this website or in open training resources are general and generic in nature. The majority of my focus is on better business practices and knowledge.
For detailed transactional or taxation advice relevant to your business, please ask your financial accountant or bookkeeper.
If you wish to replicate any advice, guidance or training for your own purposes, please have the good grace and manners to ask first.
I value politeness very highly.
For detailed transactional or taxation advice relevant to your business, please ask your financial accountant or bookkeeper.
If you wish to replicate any advice, guidance or training for your own purposes, please have the good grace and manners to ask first.
I value politeness very highly.
Ready to ROCK Your accounting?
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