Budgeting and forecasting preparation
An annual budget is a forward-looking estimate as to how your business will perform, particularly around your profit and loss (P&L) for the future ahead. A budget will look to make an estimate for every line in your P&L, from sales projections, to salaries, to travel and office spend.
Budgets must be realistic and achievable, but also appropriately challenging. Setting sales targets that are impossible is not worthwhile, nor is setting a sales target that requires little effort to achieve. This applies for all the P&L. Assuming you will halve your wages when you are intending to grow your business might not be viable unless you have a serious plan on how you will go about doing that.
It is this process of rationally thinking, challenging and interrogating your budget that should help you strike that important balance. And if you have a challenging but achievable budget, it will inspire you to succeed and deliver it. A good budget is an aspiration for any entrepreneur to work towards.
Forecasting is an extension of the budgeting process. A forecast is a ‘refresh’ of the budget, considering the first few months of your performance. With new information to hand, it can help give you an indication as to whether you are likely to meet, fall short of, or exceed your budget. Forecasts can be conducted as and when you like, but typically they are conducted every one-to-three months, depending on the appetite to see the process refreshed.
How we can build your budget
We will work with you to understand your business, how it works, what drives your revenue and pipeline and where your expenses go. We’ll do our part to challenge you to make sure it strikes the right balance of challenging but achievable. You’ll be presented with a comprehensive budget presentation, based off of your business. Finally, if your system allows it, we can upload it into your accounting tool so you can track easily your performance each month. Departments, geographies or product and service lines, we can carve and cut your budget up into as much or as little detail as you like (but we’ll of course guide you as to what’s a workable level to plan for).
Budgeting goes so well when we work with you for your other accounting matters and it can form the basis of our reviews, management accounts and other analysis we might help you with.
Ready to start the journey?
To get help with your accounts and start freeing up your time to focus on growth, talk to the Mayflower team today.