If you stay committed, you can create a budget that will keep your business on track. Here’s what you need to do to get there …
Accounting Information and Controls
Without accurate information, you can’t make good decisions. Make sure your accounting is accurate, timely, and enables you to drill down for details when necessary. You will have a better understanding of the financial side of your business, and have fewer surprises and more control. You need good financial control and processes to minimize mistakes, avoid being taken advantage of, and maximize profits.
Sales Goals & Accountable Employees
Sales goals should be consistent with the type of sales in your marketing/business strategy. Goals should identify who, what, when, where, and how. Hold your sales staff accountable. Don’t let them decide how much they can sell; management should determine pricing and terms. Any price concessions must require your/management approval. Monitor sales people frequently, and reward those who meet or exceed goals.
Hold your other employees accountable for the performance of the business, control of costs, and productivity. Set goals for them as well, and train/mentor them.
A business is formed to earn profit and increase the wealth of its owners. Management should be rewarded based on bottom line results, not on sales or gross margins. If the company doesn’t make a reasonable profit, then management hasn’t earned an extra reward.
Break It Down and Pace Yourself
Take pride in your business, but remember to set realistic goals. Overstated growth expectations can make the budgeting process a waste of time.
Take current trends, new projects, strategic initiatives, and the changing environment into consideration as you work on your budget. Evaluate your needs and take it one line item at a time.
Let your budget serve as the roadmap to meet profit goals, cash flow goals, and continued overall growth.
By NSCA Executive Director Chuck Wilson and Bronswick Reicin Pollack, Ltd. Managing Partner and CPA Jeff Bronswick