• New Wave Accountants

Simple Tips to Improve Your Budgeting and Forecasting

It's essential to start planning for the next year now, not next week or next month. Budgeting and forecasting are crucial parts of business planning. It allows you to have a clear picture of your finances for the coming year instead of having to make assumptions.


These are plenty of ways to improve your budgeting and forecasting processes to create a strategic plan that weathers financial challenges by meeting your business's financial goals.


Below, we have listed tips on how to improve your budgeting & forecasting for next year:


Keep it Flexible


Budgeting and forecasting are sometimes considered limiting or obstructive processes that reduce creativity, restrict thinking or bring too much structure to an organisation. However, this is not the case.


The key is to create a budgeting and forecasting strategy that works for you while ensuring you are not restricted in your thinking. Market volatility is growing year on year, making budgeting even more important.


Forecasting tools do not have to be complex or expensive. You can use Microsoft Excel or Google Sheets to forecast and budget.


Be Realistic


When it comes to planning, be realistic with your forecast and budget to ensure quality. Make sure that your projections have a strong foundation that is backed up by proper research and data. Research company budgets from the past and global events and trends to ensure you are as accurate as possible.


If you are a startup, make sure you have set a budget from the beginning for your start-up costs, as well as a budget for your operations. You may need to make some changes as your business grows, but be sure to keep a plan in place.


Don’t Forget to Incorporate the People


Your business is made up of people. By managing your budgeting and forecasting strategies along with the people of your business, you can find ways for everyone to make more money.


For example, if your business is not making projections for growth, the team won’t work harder to make their numbers. When your team doesn't have anything to be excited about, motivation and morale will be low.


You have to give them something to look forward to if you want them to put in the time and effort to hit their targets. This is why it is essential to have a team that is excited about the future of your business.


Track Your Performance


Make sure you are tracking your performance every quarter, regardless of seasonality or changes in your business. It's far too easy to get caught up in the day-to-day operations of your business, but it is important to keep your business strategies in check.


If you are not tracking your performance, you are not managing your business effectively. The benefit of monitoring your business performance is that it allows you to manage your money and effectively make the best business decisions.


Track your performance using a spreadsheet and incorporate key performance indicators (KPI) into your spreadsheet. You can then share this information with your management team and investors.


Consider What-If Scenarios


By creating what-if scenarios, you can effectively test your budgeting strategy. For example, if you are forecasting your revenue, create a what-if scenario where you make 33% of your projected revenue or 50% of your projected revenue.


By testing different scenarios, you can get a better idea of what your company can make. You can also run what-if scenarios on expenses or company budgets.


Avoid Too Many Details


Too much detail can take away from your ability to make smart decisions. For example, when creating quarterly forecasts, don’t create an in-depth spreadsheet with 40 separate tables. This will just confuse your management team and not provide you with any value.


Keep your forecasts simple. If you want to go into more detail, that’s fine, but just make sure that your management team needs that information.


Summary


Budgeting and forecasting are essential business processes that aren’t just about tracking money. Budgeting and forecasting help you plan for the future of your business and give you a chance to experiment and try new things to improve your business.


If you want to improve your business processes and increase your revenue, you need to start budgeting and forecasting today.


Take your business to the next level by contacting our team today. Budgeting and forecasting can require a lot of work and effort on your part. If you need some assistance and guidance, let us help you. New Wave Accounting has some of the best accountants on the Gold Coast. We provide the best solutions to all of our clients. Contact us today to get your finances sorted!




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