Having a specific plan in place will dramatically increase your chances of hitting your goals. You have heard the experts say that…but what does it really mean for you and for your company? Is it something that you put together on a legal pad or on a spreadsheet during lunch? Hopefully not…
Budgeting: Business planning starts with a Budget. How do you put together a budget? We base our decisions off of the financial statements (Income Statement and Balance Sheet) so it only makes since that we create a budget for both. This will give us not only projected income/expenses, but a budgeted cash position as well as Accounts Receivable and Accounts Payable. It is important to budget for all of these areas as they all will have an impact on cash. If you don’t hit your sales goals, your cash will be lower. If you don’t collect on your invoices to your customers, cash will be lower. If you don’t pay your bills on time, cash will be higher. All of these areas are important to know and vastly impact the business…so we budget for all of them.
Forecasting: Continually update your budget with new information and it now becomes a forecast. A forecast is much more useful in the long run than a budget as it stays up to date with what is going on within your company. Being able to update the forecast with new information as time marches forward gives you a much clearer picture of the state of your company at any given point. This provides better information to the business owner and allows them to make better decisions. When should you hire? Can you make that large capital expenditure in cash or will you need financing? What will the implementation of a line of credit mean to your organization? How will any of these things impact the future trajectory of your company? If we are maintaining a forecast, we can easily model this for you and test our decisions in a risk free environment.
Reviews: We meet with you each month to go over revisions in sales activity, expected expenses, any adjusted goals or obstacles as well as any other changing information and we will then adjust the forecast to reflect the updated information and review the results. This allows you the opportunity to test any decisions as well as for us to update you on what we believe is either going to happen, or needs to happen.