Thursday, 10 December 2020

Ways to Improve the Budgeting & Forecasting of a Business


Forecasting and budgeting are crucial for your business's financial management and success; however, several companies often fail to perform these activities efficiently.

Following are the top ways suggested by industry experts to improve budgeting and forecasting:

 

Janeesa Hollingshead, Co-Founder of JJ Studio

 

One of our best tips for improving budgeting & forecasting for businesses is to get benchmarks from industry experts. Many new business owners try to Google benchmarks, which often proves to be difficult -- but they don't think to ask a CPA that specializes in their industry, an incubator or investor group, or an industry association leader. Many people are more than willing to hop on the phone for 15 minutes to give you a few budget benchmarks based on what they've seen across businesses similar to yours.

 

Jason Wong - DoeLashes

 

Plan several scenarios and have an understanding of some of the hurdles that could impact your original prediction and budget. Review external market and economic patterns that could have a negative influence on your business. A rolling forecast is useful for keeping on top of any developments that may have a significant effect on the business, negative or optimistic. Rolling projections will encourage you to pivot on the basis of any new data provided as required because all decisions are based on what is happening now and not on what happened in the previous year.

 

Swati Chalumuri - Hearmefolks

 

Plan for Eventualities

While you can't know the future, the success of your business hangs on your ability to rise up to new trends in the industry. Staying up to date calls for having rolling forecasts at your fingertips. As such, read on emerging marketing trends from both your direct and complementary competition. This will make your budgeting better targeted at eventualities than plugging failures of the past periods.

 

Richard Latimer CEO of Veritas Homebuyers

 

For smaller to mid-sized businesses, there is an excellent way to improve your budgeting by accurately forecasting. A good way to achieve this is by running the right reports in your accounting software.

 

If you have a bookkeeper, then have them run reports that meet your current needs, whether you are trying to forecast or tighten costs.

 

A good report that I could recommend is looking at a specific period of time (a month or more) and total your costs. Then allocate each cost into a comprehensive category and then express the costs as percentages of the total. This is a good way to look at your cost categories to see what makes up the bulk of your spending.

 

Mark Perlman, Founder of TheDealExperts.com

 

Include all pertinent personnel

 

It's important to not only include your finance personnel but to include at least one senior member of each department. What you gain from this is a clear insight on where the business currently stands as well as a perspective on where you're most likely to be in the future.

 

Plan for Various Outcomes and Remain Flexible 

 

As things change in the industry around you as well as internally, you must remain vigilant and be prepared to pivot, if required to do so. Every industry will experience change over the course of a year, whether it be from competition shifting their strategy or markets being completely turned upside down, as we've seen this year.

 

Bookkeeping also plays a pivotal role in financial forecasting and budgeting. Accurate bookkeeping records can help you understand your financial position and make future budgets accordingly. You may also consider online bookkeeping services to make your books streamlined and always get the actual numbers. However, considering the above-shared suggestions by experts, you can develop the financial forecasting and budgeting practices you are already performing for your business or may start working on new ways you learned from these tips.