Tweet

Eight Key Budgeting Tips

Guest post by: Gene Siciliano

Article Overview: Most companies don't use budgets to help them meet profit goals. The fact is, however, that budgeting is the most effective way to consistently meet profit targets and avoid costly surprises. Owners and CEOs need to begin controlling the bottom line with some of the same tools they use to control the top line, and budgeting is the first step. Consider these eight tips to help you become a better budgeter.

Eight Key Budgeting Tips

Most companies don't use budgets to help them meet profit goals. Why? Well, most owners and CEOs reason that the effort required to learn how to build and use workable budgets is just too much. They seem to feel that learning how to budget is more frustrating than just hoping the numbers will all work out-if they only sell enough widgets or services or whatever.

The fact is, however, that budgeting is the most effective way to consistently meet profit targets and avoid costly surprises. Budgeting helps you invest your resources to your company's best advantage-based on careful consideration, rather than the urgency to make some kind of move today.

Owners and CEOs need to begin controlling the bottom line with some of the same tools they use to control the top line, and budgeting is the first step. Consider these eight tips to help you become a better budgeter:

1. Take the time to do it right. A budget is not a sales forecast you put together on the weekend to impress your banker. It must be the result of coordinated input and effort by you and your top management team. That makes budgeting a project that requires some time and thought, just like any other project your company takes on.

2. Practice, practice, practice. Regardless of how tough it may be to estimate the future, your forecasting accuracy will improve, and you'll be better able to control the results, if you actively use a budget. Practice does make (almost) perfect.

3. Don't think your company is the exception. Any business can be budgeted. The only question is how much practice it takes to strike a balance between the time invested and your forecasting accuracy. Remember that a startup business has to be forecasted and budgeted in order to get financial backing. This includes companies trying to do something that's never been done before.

4. Use a Gantt chart. This is an expanded timeline to track deliverable dates for budget completion. It will tell you if you've scheduled too much to be completed in too short a time given other business activities that also require your team's participation.

5. Don't try to budget to the last penny. Predicting exact results down to the penny is not the objective. Rather, budgeting is more about giving your employees a direction to use for course corrections at a level of detail where it matters. If you try to forecast every last expense, regardless of how small, the details will drive you crazy.

6. Make the tradeoffs when necessary. You have finite resources available to you. If you must spend money for something you didn't budget, decide what budgeted expenses can be removed to "finance" the new item. Without this discipline, you will almost always overspend-because there are always good reasons to spend money. They don't always produce more profit, however.

7. Set both profit and cash flow targets. These two measures are very different and require different kinds of measurement and monitoring to prevent unpleasant surprises. Don't believe me? Keep in mind that every year businesses with great profits fail due to a lack of cash.

8. Ask three questions to analyze the results. With budget comparisons in hand, ask your team these three questions at the end of every month:

• How are we doing compared to the budget? If results differ from the plan, why did this happen?

• What must we do now to have a better result next month? How can we keep the positive differences and avoid more of the negative ones?

• What are we learning that will help make next year's budget better?

By following these tips, your income statement will be more informative, your bottom line more appealing, and your peace of mind more comforting.

Related Articles
  Zero Based Budgeting in Managerial Accounting
  How Your Budget Can Help You During The Tough Financial Times
  Zero Budgeting for a Home Business
  3 Tips Every Female Entrepreneur Should Know About Business Budgeting
  The Secret to Less Anxiety over Business Cash Flow
  Baby-U-Deserve-Getting-Every-Thing (Budget)
  Preparing an Accurate Marketing Budget
  Has Your Business Budget Crossed a Line?
  Personal Finance Budgeting
  Home Based Business – How Budgeting Will Increase Your Efforts
  Personal finance software helps get rid of overspending syndrome
  Bookkeeping Tips on Tips
  Achieving Your Goals through the Wealth Management Strategy
  Should My Business prepare Budgets and Forecasts? What is the real Value?
  Budgeting Made Simple for the Small Business Entrepreneur
  The Top Business Best Practice
  Why Budget?- The First Step to Wealth Management and Financial Freedom
  Traditional Budgeting vs. Beyond Budgeting: Three Core Differences
  Entrepreneurs Want A Smoothly Running Profit Making Business?
  Flexi-budget - Planning for uncertain times

Article Tags: budget tips, budgeting, profit goals
Referred by: http://donsadlerwriter.com



Related Forum Posts
Business Tips - How about: Tips for managers to handle employees more effectively? Tips on how to deal with difficult customers? Tips on how to deal more effectively with suppliers? The only three I have in mind right now, but will try to come up with something else. Chris
Re: Budgeting Approach - Budgeting plays a vital role in any business. I totally agree with Ringo what he said and how they had planned to invest and continue with their business. The information you share over here is nice peter. Small entrepreneur will get a great help from your provided information.
Re: Budgeting Approach - [quote="baconmarius":252nopeg]Budgeting plays a vital role in any business. I totally agree with Ringo what he said and how they had planned to invest and continue with their business. The information you share over here is nice peter. Small entrepreneur will get a great help from your provided information.[/quote:252nopeg] Good points. Also, there's no successful business without a settled budget for this and that so you really have to mange the money inside the pocket, the assets/investments as well as the liquid ones so you'll always have something to grab the moment you need it the most.
Re: Using Craigslist SEO to Promote Your Website - Great Craiglist Tips for driving traffic. I can definitely use these to drive traffic to my blog.
Re: Search Engine Tips and Ideas - Share Yours - Hi there, I answer this post, to start off. I am still learning a lot on all these subjects. Moreover, we have a wonderful tool to find out from previous posts. On the top right corner, use 'Advanced Search' and write 'Search Engine Tips'. It brings up all the previous posts with that information. Check it out. You will be surprised all the inherent information stored.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How to develop the best lateral thinking skills

How To Be Happy at Work? Acknowledge Yourself

What To Do With a Troublemaker?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.