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 bookkeeping outsourcing 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.
