Does Your Business Need A Budget/Forecast?
If you haven't heard us talk about it before - a budget or forecast is essentially a crystal ball for looking into your business's future profitability and, crucially, providing accountability and measurability for the work you do to grow and improve your business. Here are three indicators your business might desperately be in need of a budget:
You are trying to make strategic business decisions. Does it make sense to expand? Hire more employees? Take out a loan? Any future-looking decision NEEDS data from a forecast to answer these questions.
You have employees. As mentioned above - employees are normally one of the biggest expense-items for a business. Can you make payroll next month? Six months from now? A year from now? A forecast will help you determine what your expected cash balances will be so you can plan well in advance for payroll needs.
You want to be more proactive. The best offense is a good defense. Proactively planning for potential problems in your business, as well as planning for different revenue and cash scenarios, will help you determine what decisions need to be made today, to make you successful tomorrow.
So when do you NOT need a forecast? Is your business model simple (same revenue and expenses coming in each month), big margins, or maybe you're not looking for any growth and have no plan to hire employees. If that's you - then maybe a forecast isn't needed. That said, we still work with many businesses (including some of our own) that have a simple and predictable models, but we still find immense value in simple budgeting exercise to 1) make sure there is enough cash coming in to cover taxes at year end 2) make sure there is enough cash coming in to cover expenses if there is a time difference from one month to another and 3) determining sales targets, staffing needs, and investments needed to sustain operations/growth.
The great news is that budgeting and forecasting are tasks that Seamless is highly skilled at and engages in with many of our clients. We’ll lead the process, create the work product, and all you have to do is answer a few questions each month to gain valuable insights into the reality of your business.
