Budgeting/Projections

With 31 March approaching and this being a popular year end for businesses, business owners will be thinking about trading for next year. In our experience the businesses that set budgets and measure these against actual as they progress through the year are more likely to return what they are looking for.

Setting budgets allows you to look at both the income and expenses and see what has been good for the business and returned profits and where there are areas that more work is required or indeed you do not want to repeat.

Some points that you should think about when doing budgets:

• Should I just add a % – maybe but surely if you can look into the different areas of both the sales and expenses and where they come from then the % may vary or indeed the sales or expense may be taken out if not required. You should know your business more than others.
• What format do I use – At Johnston Smillie, we have budget tools and can bespoke this for your business. It can be as complicated or as simple as you want it.  Most accounting software these days has a budget function as standard.
• Should I update the budgets – You should certainly consider if major changes happen to your business that your budgets are updated.

Once the budget is in place, it is very easy to turn this into cash flow projections which again help you make decisions on the business.

There is a saying that says ‘ No one ever plans to fail’ – if you carry out budgeting/projections then you are setting out the plans for the business and asking yourself and your team questions on where are you going – and do you want to go there!

If you wish to discuss any of the above further then please do not hesitate to us.