|Plans to increase sales by 20%, add staff, attend conferences, and buy new equipment.|
A budget can help you achieve those goals.
Get it “on Paper“ in a Spreadsheet.
Here’s a simple and effective way to create a budget for your business.
1. Start with Revenue. Work out your revenue projections by month for 2020. Look at your sales plan for 2020 and be sure your conversations with your customers will move you toward your 2020 revenue goals. Look back at 2019 to see if anything adversely affected revenue and determine what should change for 2020.
2. Estimate the Cost of Goods Sold (COGS) to support your revenue goals. Remember to include labor costs as a part of COGS.
3. Budget your Expenses by month – this is the easiest part of budgeting, because you have the current year to use as a model. If you have plans for travel, new equipment or anything else that would be different from 2019, plan for it in your expense budget now.
4. Finally, don’t forget to take into account inflation rates/interest rates and raises you plan to give your employees.
Stay in the Real World
Budgets only help if they are based on reality. Virtually everything consumers and businesses purchased in 2019 will cost more in 2020.
When you’re considering revenue for the upcoming year, is there anything that could change with your current customer base? What is your normal attrition rate? Should your own prices be adjusted to reflect current conditions?
A Budget Can Do More Than Predict Net Income
Do you have a financial goal in 2020, like paying off a large capital expense or paying off a loan early?
A budget can help you build in the payments you’ll need to achieve those goals.
Add Your Budget to QuickBooks
Once you complete your budget, pass it on to your accounting team at Blazej. We’ll load the budget into QuickBooks and your reports will be adjusted to show budget vs. actual for 2020.