The new financial year is a great time to review your business budget and forecast for the upcoming year. This is an essential planning tool that helps control spending and identify potential problem areas where revenue might not cover spending. It also identifies potential growth opportunities when you may have extra cash that could be invested in new opportunities. If you’re not sure how to create a winning business budget, don’t worry – we’ve got you covered! In this blog post, we will discuss how to create a budget for your business and identify when you deviate from your targets.
We will also provide some tips on how to stick to your budget and make the most of your financial resources. So, let’s get started!
Creating a budget for your business is not as difficult as it may seem. The first step is to gather all the relevant information about your income and expenses. This can be done by reviewing your bank statements, credit card statements, and any other records you have of past income and expenditure. Once you have this information, you can start to put together a budget for the upcoming year.
When creating your budget, it is important to be realistic about your income and expenditure. Be sure to account for any seasonal changes in income or spending, as well as any one-off items that may occur during the year. Once you have a realistic picture of your income and expenditure, you can start to allocate your resources accordingly.
Once you have created your budget, it is important to monitor your progress and ensure that you are sticking to your targets. This can be done by tracking your actual income and expenditure against your budget on a regular basis. If you find that you are deviating from your budget, it is important to take corrective action to get back on track.
Why create a budget for the new financial year?
There are several good reasons to create a budget for the new financial year. A budget can help you to:
- Estimate your business’s future revenue, expenses, and profits
- Control spending
- Identify potential problem areas where revenue might not cover spending
- Identify potential growth opportunities when you may have extra cash that could be invested in new opportunities.
Creating a budget is an essential planning tool for any successful business. If you don’t already have a budget, now is the time to create one! For more information on creating a budget, check out this link from Business.gov.au:
What items should I include in my budget?
You’ll need to consider both your revenue and expenses when creating your budget. For revenue, think about how much money you expect to bring in from sales, services, investments, etc. Then, list out all the expenses your business will have, including things like rent, salaries, inventory costs, marketing expenditures, etc. Once you have a good handle on your projected income and expenses, you can start putting together your budget.
There are a few different ways to approach this process. Some businesses prefer to create detailed monthly budgets while others simply set an overall spending limit for the year. No matter which method you choose, be sure to include some wiggle room in your budget in case unexpected costs come up throughout the year.
Can my accountant create my budget for me?
Whilst not advisable to completely outsource to your accountant they should be involved in providing both professional experience they also can be a source of Accountability. Creating a budget is an essential first step in the financial planning process, and it’s one that you should be intimately involved in.
So where do you start? The Australian government website has a great guide on how to create a budget for your business. We’ve summarized the key points below:
- Know your business’s revenue streams: This includes sales from products or services, interest and investment income, government grants and other sources of revenue. Make sure to include all revenue sources when estimating your total income for the year.
- Know your business’s expenses: This includes things like staff wages, rent, materials and supplies, marketing and advertising, travel and entertainment and other operational costs. Again, make sure to include all potential expenses when estimating your total costs for the year.
- Have a realistic view of your business’s profits: Once you’ve estimated your income and expenses for the year, you can start to develop a picture of how much profit your business will generate. It’s important to be realistic here – if you’re overestimating revenue or underestimating costs, it could lead to problems down the road.
Once you have a budget in place, it’s important to monitor actual results against budgeted amounts on a regular basis. This will help you identify any areas where you’re overspending or underperforming and adjust accordingly. Whilst you should create your own budget you should consult your accountant or financial team to review your budget and for budget-related assistance during the creation of your budget.
Following these tips, you can create a winning business budget for the new financial year! If you need any help or advice, please don’t hesitate to contact us. We would be more than happy to assist you in creating a budget that works for your business. Thanks for reading!