When your business is operational, it is essential to plan and tightly manage its financial performance. The creation of a budget process is the most effective way to keep your business and its finances remain on track.
This guide explains the benefits of business planning and budgeting and how to get there. It suggests action points to manage the finances of your business more effectively and ensure that your plans are feasible.
• Planning for business success
• That inclusion in your annual plan
• Normal cycle of business planning
• Establish a budget and business plan
• Advantages of a business budget
• Create a budget
• Key steps in preparing a budget
• What your budget should cover
• What your budget should include
• Use your budget to calculate the return
• Review your budget periodically
Planning for business success
When you run a business, it’s easy to get bogged down in day to day problems and forget the broader context. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regular monitoring of financial and performance.
A structured planning can make all the difference in the growth of your business. It allows you to concentrate resources on improving profits, reducing costs and increasing return on investment.
In fact, even in the absence of a formal process, many companies do most of the activities associated with business planning, such as thinking about growth areas, competitors, cash flow and earnings. Converting this into a cohesive process to manage the development of your business does not have to be difficult or time consuming. The most important is that plans are made, they are dynamic and communicated to all concerned. See page of this guide on what to include in your annual plan.
The key advantage of business planning is that it allows you to focus on the direction of your business and provides targets that will help your business grow. It will also give you the opportunity to step back and review your performance and the factors affecting your business. Business planning can give you:
• better ability to make continuous improvements and anticipate problems.
• reliable financial information on which to base decisions
• better clarity and concentration
• greater confidence in your decisions
That inclusion in your annual plan
The main purpose of your annual business plan is to establish the strategy and action plan for your business. This must include a clear picture of your current financial situation, and planned for the coming year.
Your annual business plan must include:
• preview the changes you want to bring to your business
• any changes in your market, your customers and competition
• your objectives and goals for the year
• your key performance indicators
• any questions or problems
• any operational changes
• information about your management and staff
• your financial performance and forecasts
• details of investment in the company
Business planning is most effective when it is a continuous process. It allows you to act quickly when necessary, rather than simply reacting to events after they occurred.