In talking with business people all across the United States, it’s amazing how many CEOs, presidents and business owners have not prepared a formal budget to operate the business. Budgets are essential to your business success.
Many business people managing a business have no idea what current sales are or the employee payroll, fixed operating costs or whether the company is making or losing money each month. Let alone for the business year.
Many business people only know if they can pay their bills each month.
It’s not till April 15th of the following year when business tax returns are due that an awareness of what it takes to run a company becomes apparent.
Does this sound like you at all?
In addition to budgets, whether you have an in-house bookkeeper or a CPA firm, you need to have detailed monthly profit and loss statements.
- Profit and loss statements are important in order to know if your business is making money; to know if and where you are over budget for the month, quarter or year.
- Profit and loss statements can determine if the budget was done incorrectly or alert you to a problem in a particular category.
- Profit and loss statements also help you formulate your budget for the next business year.
- Without a monthly profit and loss statement, you really don’t fully know what is going on in your business.
It’s true that a budget is just a projection or an educated guess of what you think your company expenses will be for the coming year. But after you’ve been in business long enough and done enough projections for the budget, your projections get more and more accurate.
By the fourth quarter of the year the budget for next year should be in some phase of completion. If it’s not, today is a good day to get started as the New Year is fast approaching.
A yearly company budget helps you understand, for example, how much cash flow you’ll need, what you can spend on advertising, office supplies, equipment, labor and all the other expenses in your business.
By evaluating your profit and loss statements as well as last years budget you can see what areas to increase spending and where to decrease spending. The company budget also helps you know how much revenue you need to bring in to pay the bills, break even or make a profit.
There’s an old saying: Most people don’t plan to fail. They fail to plan.
Remember: Company budgets done right are a key to continued business success.
If you want to get your new business year off to a good start on January 1st, preparing a company budget in the closing days of the current year will give you a better and more complete understanding of your business, help to control your costs and, most importantly, make a profit.
Having a company budget simply assists you, the CEO, president or business owner, to stay on top of your business.
To your success!
Howard Lewinter guides – focuses – advises CEOs, presidents and business owners throughout the United States to MORE success – MORE profit – less stress. Get MORE from your business! Talk business with Howard: 888-738-1855.