SHARE

When a new year approaches, it’s time for small business owners to start year-end planning. The cornerstone to successful year-end planning is a well-crafted budget, as it provides a roadmap for the future of the business. While every small business differs, this guide details how to plan to drive your business forward.

Budgeting and Forecasting to Reach Your Goals

1. Predict Your Income

• Consider Past Performance: As your small business moves into the next year, forecasting your income will be essential for creating a realistic and growth-oriented budget. Start forming your projections by reviewing your revenue streams and analyzing income trends over the past 12 months.

• Account for Fluctuations: To help finalize your projection, consider factors that might impact your sales patterns, such as seasonality, industry changes, economic conditions, or competition.

2. Prioritize Operating Costs

• Anticipate Operational Needs: Think about the fixed items you can’t cut first, like rent, inventory, utilities, and other operational costs.

• Plan Ahead: Review your contracts for any opportunities. For example, see if investing in bulk inventory or long-term leases will be more cost-effective in the long term. Another area to consider looking into is technology. What technology can be invested in to increase efficiency?

3. Payroll Comes Next

• Plan for Staffing Changes: Work with your HR team to forecast payroll expenses. Don’t forget to identify who might need a raise next year and whether you’ll need to expand your team to meet next year’s goals.

4. Invest in Business Growth

• Fuel Expansion: Looking to grow? Plan to invest in growth initiatives. Whether through marketing, product development, or entering new markets, these investments could help your business reach new heights.

• Hit Your Targets: Set clear key performance indicators (KPIs) to measure the success of those growth initiative investments. Regularly tracking KPIs will help you stay on course and adjust your budget as needed.

5. Plan Wisely to Grow Stronger

• Don’t Forget Taxes: Work with a business tax advisor to explore tax planning strategies that could help reduce your liability. Be sure that your budget accounts for the cost of taxes.

• Protect Your Business: Things can and will happen. Plan for a reserve to cover unexpected costs and avoid financial pitfalls.

Getting Started on Your Small Business’s Budget

Every business is different, and so is its budget, so it’s best to speak with a business advisor to get informed insights tailored to your business’s needs. Have questions about developing your small business budget? We’re ready to help. Contact us to meet with our team of business advisory experts.