When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. Staffing problems and customer issues can distract you from considering the long term strategy, however, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance. Even without a formal process, many businesses in the Dungannon area carry out most of the activities connected with business planning, such as thinking about growth, competitors, cashflow and profit. Changing this into a solid process to manage your business development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are active and are communicated to everyone involved.
Many of the new small business owners I meet, run their businesses in a relaxed way and do not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time. If your business is growing, you may not always be able to be hands-on with every part of it. You may have to split your budget up between different areas such as sales, production, marketing etc. You'll find that money starts to move in many different directions through your organisation - budgets are a vital tool in ensuring that you stay in control of expenditure.
Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, so that your business remains profitable and successful. It need not be complicated. You simply need to work out what you are likely to earn and spend in the budget period.
Begin by asking these questions: What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future. What are the direct costs of sales? – i.e. costs of materials, components or subcontractors to make the product or supply the service. What are the fixed costs or overheads? You should break down the fixed costs and overheads by type. Once you've got figures for income and expenditure, you can work out how much money you're making. You can look at costs and work out ways to reduce them. You can see if you are likely to have cash flow problems, giving yourself time to do something about them.
When you've made a budget, you should stick to it as far as possible, but review and revise it as needed. The successful businesses I know have a rolling budget, so that they are continually budgeting, e.g. for a year in advance.
I am not saying that dealing with the problems that are on your desk now is wrong – avoid getting bogged down and take some time to consider the future.