Whether you’ve knocked 2018 out of the ball park or you are tired of being disappointed at year end. If you want to make 2019 better, this article is for you.
The biggest opportunity entrepreneurs miss isn’t the next sale. It is strategically building a healthy bottom line. Why? Because the most obvious first step is missed. Planning for it.
By budgeting you can achieve so much more than you ever thought possible. I know what you are thinking. Budgeting isn’t going to change anything. But hold on and read on.
Yes, a budget is a simple concept. And yes, it does sound boring. But when done well, it is your financial plan for the year. It creates focus, controls costs, influences behavior and decisions, and identifies opportunities. All of which lead to a robust bottom line.
Here are the 6 simple steps to an effective budget:
One. As the CEO, identify your big picture goals, such as sales, margin and net income.
Two. Engage your leadership team, without disclosing your goals. Ask them to identify their big goals for their divisions. Ask them to also determine what new investments – such as technology, new people, new products, etc. – are needed to achieve those goals.
Three. Step back and see if your leadership teams’ goals are bigger than yours! You will be surprised at how many times this happens. If so, upscale your goals.
Four. Turn over your big goals, big ideas, and new investment information to your accounting department and/ or bookkeeper and ask them to translate it into financial terms.
Five. Review the results, adjust and finalize the budget. Have the accounting department or bookkeeper break it into monthly budgets.
Six. Make it actionable. Prosperous companies review their budgets monthly.
In your monthly budget review, you’ll get a quick pulse on your business. If you are on track, the discussion will be short and include high fives, and keep up the good work. If you are off track, you’ll clearly see where you are off plan. you’ll know who to talk with and can intelligently arrive at a course correction plan.
Nothing is more important than your bottom line. Let go of all those preconceived notions or past ideas about why budgeting doesn’t work and get started today. Plan your work and work your plan.
Plan now to make 2019 a year to celebrate.
To your prosperity,