While it may be too late to take advantage of end of financial year planning, the arrival of the 2013/2014 financial year is an opportunity to look at updating or developing new budgets for your business.
Financially mapping your business reduces your risk and removes some of the surprises that can occur. Your budget needs to be realistic – not just a percentage increase on last year.
It is important to map your revenue to see where, how and when the money is coming in to create a reliable estimate of your income for the coming year. This allows you to set realistic expectations about the financial position of your business.
Once you have your revenue expectations in place, look at what is required to generate that income. For example:
- What advertising, marketing and resources will be required?
- When you are comfortable with your revenue, work up your expenditure budget.
- Don't forget to allow for growth and the increases that are likely to flow through.
Once your budget is complete and you have a good idea of your likely profit margins, do a couple of alternative estimates for your key revenue drivers so you understand the impact of changes to your assumptions. Once you have all this in place, track and measure it throughout the year.
Where possible, your management team should be a part of this process and take responsibility for achieving the budget numbers they give you. When staff don't take the steps that they knew were required to achieve the budget, the gaps become obvious fairly quickly. Having a budget in place that you need to report on regularly makes you focus on what really needs to be done.
Working with your accountant will help you to not only plan your budget but also to set up your financial position for the coming year, including cash flow, managing growth and planning for next year's tax.
Need help with your budget or new financial year planning? Contact us on 02 9957 4033 or send us an email.
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Last updated July 2013. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.