Even if you missed to do your budgeting homework for 2019- here’s how you can still reach your goals
What if you have missed the opportunity to make a yearly planning at the end of 2018 for 2019. And you still want to achieve outstanding results and make it possible to reach your goal this year.
How about starting with a quarterly planning for Q2, Q3 and Q4. By then, you will have been doing your homework on a regular basis and the dreaded yearly planning will sound like a walk in the park.
Of course, there is a lot to consider in terms of where your business has been and where you are headed. It’s important to be organized and stay focused because how you plan often sets the tone for your business.
Here are some important points to follow:
1. Review your strategy and your mission
2. Determine your profit and cash flow goals – and compare them to your actuals
3. Update your organizational chart, if necessary
4. Create a detailed sales plan (per product group, product, branch, sales staff…..)
5. Make a financial plan using a P&L structure
6. Incorporate meaningful KPIS in your daily business life (in harmony with your strategy)
7. Involve your team in order for them to believe in the goals you have set for the company
There are a lot of checklists out there. The only challenge is to find out which ones will be able to help you. Here’s a summary of what you need to think about:
- Make sure you have your 3 statements every month: Balance sheet / Income statement / Cash flow statement. Why? –> These 3 statements are the base for you to make long lasting financial decisions. They will also be the structure you will follow when you start planning.
- Set your goals for the rest of the year or at least for the next 3 months in terms of: Income: Sales: detailed per product/product group, make sure you have an efficient pipeline system. Expense: Manufacturing costs: per product/product group, Staff costs: make a list of your employees and their salaries plus taxes, General and administrative expenses: for every cost center. Why? –> This planning process includes all major costs for you to be able to know where you want to stand at the end of the month and then make a ACTUAL/FORECAST comparison. You will be able to make the analysis cost level per cost level so that you know, if there is a big difference, where it is and tackle the challenge right away.
- Know and evaluate your current tax strategy Why? –> You need to know how (and how much) and when your taxes will be paid in order to include them in your planning to increase the accuracy of your forecasting.
- Make sure that all your billing and invoicing processes work smoothly (finished preferably within 10 days after monthly close) Why? –> Numbers also have an expiry date. If you get your numbers more than 3 weeks after the monthly closing, too much has happened during these 3 weeks and it will be difficult to make a sound decision based on them and therefor a meaningful planning for the months ahead
Also, if you define responsabilities, then you will be able to track down errors when made and learn from them. Responsibility encourages an accurate budget planning and a feeling of ownership when reaching the goals.
And finally, I encourage business owners and entrepreneurs to actually plan their goals monthly and have a monthly result cession. When you get to compare your actuals against plan every month, if you are off course, you have the possibility to correct and improve your results much faster than your competition. So, how about starting now to plan your results quarterly?