How to create a budget that will work for you

One part of the budget process that's often overlooked by small business owners is forecasting a budget for the year. Although forecasting a budget can be challenging, it's vital that you adequately prepare as best you can.

There are many external factors that can have an effect on how accurate your budget is, such as changes to the Australian dollar or even the impact of global businesses entering a market. So how do you make a budget that will be relevant to your business?

Start with a business plan

Given the rise and fall of the Australian dollar and the increasing impact of the global market, a business plan is a must for any small business hoping to flourish. 

Your business plan will also be a major indicator as to how adventurous or conservative your budget is going to be as it highlights the objectives of your company and how you are positioned to meet those objectives. Ultimately your business plan will consider more than just the financial implications moving forward and that in turn will allow you the information you need to budget more accurately.

Set yourself a time frame

Don't overdo it. Although you want to be accurate in your budget forecast, it's important you don't spend too much time chasing the perfect numbers. The last thing you want is for your budget to take up majority of your time and have a negative impact on your business operation. Generally speaking a budget for an SME can be juggled with your regular tasks and shouldn't take any longer than two weeks.

Prepare for different scenarios

As mentioned your budget can be implicated by external factors and one way to confirm a more accurate forecast is by adequately preparing for different scenarios. Scenario planning will allow you to identify areas that could potentially impact your budget, such as market growth or introductions of new laws, and then implement those considerations into your forecast.

One effective way of ensuring accuracy is by forecasting a budget based on the expected case and then a worst case scenario, this way you are adequately prepared for whatever the future may bring.

Review your budget

The best way to confirm the accuracy of your budget is by constantly reviewing it. This can vary depending on the industry you operate in, with some sectors requiring weekly reviews and others only requiring a monthly check up.

It's important to remember that circumstances can change and you should never set your budget in stone then completely forget about it. Reviewing your budget won't take too much time and will allow you to review other areas that could be changed in your business, such as expenses and costs.

Very rarely will a business succeed without adequate planning and strong forecasting. By developing a budget and taking the effort to consistently review and plan for the future you increase your chances of success and give your company the best chance it has to flourish.

Want to learn more about forecasting? Try these links!

Connect with us to receive updates throughout the day:

Like us on Facebok Follow us on Twitter

Dun and Bradstreet AustraliaTop of page Dun & Bradstreet Australia Pty Ltd 2015 | D&B Small Business    *About Us    *Sitemap    *Advertise    *Privacy    *Terms & Conditions