With each new financial year, there’s new opportunities for your business to thrive! It’s the perfect time for you to sit down and carefully consider your options. Set some new goals for your business and have something for you and your team to drive towards over the next year.
There are many ways in which you can do this, one of which is by coming up with a new business budget altogether. Think of it like a spring clean – it sounds like a lot of work, yet, but in the long run, you’ll be glad that you took the trouble to do it, that’s for certain.
So, where do you begin? Just as anything else, you should start from the ground and work your way up. Begin by establishing how much you’d like to make. Obviously, the more the merrier right? Though, it pays to be realistic, particularly when it comes to budgeting.
Following that, assess how much money you’re forking out on expenses and then try to determine (if possible) where you can cut back. From there it’s quite straightforward to get a clear image as to where you need to be – are you ready?
1 – Net Profit
You need to determine how much profit you aim to make over the next financial year, after of course, paying yourself a salary. Again, it’s easy to say X-amount, so be realistic otherwise you’ll only find yourself feeling disappointed. That being said, it’s good to aim big as it will give you all an incentive to go that extra mile and really push yourselves every single day.
2 – General Operation and Expenses
Look at absolutely everything it takes to run your business, from vehicle tax, utility bills and insurance. There are always ways to cut back and they don’t have to be all that drastic either. It could be as simple as replacing your light bulbs with energy savers or doing away with certain benefits such as company cars for employees who don’t particularly need them.
3 – Direct Service/Product Expenses
Direct expenses are the costs which are linked to the creation of your products or whatever it takes to provide your services. So, employee wages, post and packaging, materials and so on, all fall under this category. And though it’s not always easy to cut back on these kinds of expenses, you should look for ways to streamline your services and cut back, even if a little bit.
4 – Add the Above Together and Voila
When you add all of the above together you will have your target revenue. This can then be broken down into monthly targets for your employees to aim for – particularly if you’re in a sale’s driven environment.
Of course, you must consider seasonal changes and any other variations which might affect your earning potential. Following that you should review your previous targets in order to gain a realistic view on just how achievable this new target is. Provided that you follow these steps carefully, you remain consistent with your production and service delivery and your employees are incentivised and entirely on board, you shouldn’t have any problems exceeding your goals.
If you’re feeling a little overwhelmed by the prospect of going through all of these figures by yourself, then there’s no shame in hiring a reputable accountant to assist you. This will afford you more time to focus on other areas, such as cutbacks and streamlining your service. If you want the best results, it may well be worth having some professional assistance.