Your company may have gotten by without a financial plan in the past. You may have even cruised along without needing to dig deeper into your revenues and expenses. But as the fiscal year begins for many companies, now is the time to start considering creating a budget.
Simply put, a fiscal budget is a document that projects profits and costs over a year. By creating one, you can capitalize on the information learned from all the data you were already collecting. From invoices to expense sheets, organizing this data into one document can help you grow your business in ways you may have never even considered.
While starting one may seem intimidating, it doesn’t have to be. Using the right program can make all the difference. Our Mobile Office Manager has a budget module that offers you the tools you need in a single program, so you can better understand your business.
Achieve financial goals
For most companies, growing profits is the biggest goal. How to do so isn’t always as clear. However, with an efficient budget, you can gain insights into how you can improve. For example, if your company’s goal is to save money in 2018, a budget will show you all the areas in which you may be overspending so you can trim your expenses. By creating a budget, you may even discover you are underspending. You may find you have an opportunity to grow your business, such as spending dollars on branding to get more leads or worker bonuses to improve morale. A budget can take what may seem like daunting goals and make them achievable.
Tip: One-time costs, such as lunches with clients or emergency repairs, can sneak up on you and be easy to miss without a budget. Estimating these in your original forecast and keeping track of them all along will make your financial plan more accurate.
React to your business
A key aspect of any budget is entering your actual costs versus what was forecasted (such as those client lunches). This will allow you to know where you stand financially at any point in time and react accordingly. For example, if several clients adjust their service contracts, reviewing your actuals compared to your budget will cut down on any surprises – good or bad. As needed, you should adjust your budget to ensure you stay on track for the year. A well-maintained budget translates to more wins for your business.
Tip: You can review your plan as frequently as you like (from daily to quarterly) and find a rhythm that works for your business. Having reports generate more frequently means you can check in and react with enough time to make improvements.
Make smart business decisions
Learnings from your budget don’t just allow you to be reactionary; they also allow you to be proactive. It’s easy to get swept up in the day-to-day actions of your business, but taking time to review your budget means you can make smarter business decisions going forward. Let’s say, for example, that you have a peak in new clients during the spring and summer months when construction is booming. As your budget records these new sources of revenue, you can appropriately assess whether you have the correct amount of additional field workers on hand to manage workflow during this timeframe. That might mean hiring part-time technicians and ensuring customer service support is available. Careful review of your budget allows you make smart choices for your company every day.
Tip: An efficient budget module like that in MOM means you can create reports that matter to your business. Reports like your sales, project margins, inventory costs and operating costs can all be tailored to meet the needs of your company so you can make strategic decisions that’ll help you get ahead.
Plan for 2019 and the future
It’s never too soon to start looking ahead. Starting a budget now gives you an edge up on next year; you’ll be able to compare results year over year, so you can see long-term trends and how they are impacting your financial plan. For example, if you ran a discount program during the month of November 2018 to grow your margin dollars, you could analyze the profits from that program and assess whether it’s necessary to run again in November 2019. Budgets give you the data needed to forecast more accurately in the future.
Tip: Having your financial documents in order could open more doors for your business too. Potential investors or banks might require yearly budgets in order to get funding for your company.
Interested in trying our Mobile Office Manager? Contact us today to speak to our specialists.