Most businesses would now have their 2024 budgets fully or partially completed.
But how they are built and used, how often they are updated and their role in driving business performance varies significantly.
How important is your business budget to you and how do you use it?
Is it a vital tool to ensure your business achieves its goals or is it something your finance staff pay more attention to than what you and other managers do?
Is it used just as a control mechanism for spending (which is vital)
OR
Is your budget an action plan with growth targets each manager commits to and is expected to achieve?
If the budget is constructed by taking the current year’s data and just adding certain percentages to sales and expenses, that’s not a good sign.
A properly constructed budget would be built from the ground up by quantifying sales and cost units into a profit and loss account, cash flow and balance sheet. The impacts of changes in anything can then be shown in the P&L and bank balance.
Of course, the last few years have thrown some of the greatest challenges at business predictions through Covid, Ukraine war impacts on energy prices, materials shortages and inflation. As the many global threats seem to escalate the importance of having a properly formulated financial plan tested for the impacts of various factors will greatly ensure your chances of success.
We would all love more certainty in our businesses but the only likelihood is increased volatility.
Having a business and financial plan fully embraced by all your team can give you the best chance of making the absolute best of whatever challenges 2024 throws at your business.
If you are interested in discussing whether your procedures might be improved, just contact me for a chat.