Strategic Planning Part 2: Budgeting and How to Prepare

Far West Capital

Budgeting

If you haven’t started preparing for 2014, you might want to consider starting now. For many businesses, these last few months are the busiest time of the year and it won’t be slowing down anytime soon. In our previous blog post, we discussed how to strategically prepare for the new year. Next up, we’ll focus on how to effectively plan your budget, which is a vital component that cannot be overlooked as you plan for success in 2014.

Setting up a strong foundation for your strategic plan means paying extra attention to the numbers. This means both re-evaluating your budget from the current year and covering your bases for new endeavors in the coming year. There’s nothing worse than being ill prepared for unforeseen expenses, and small things have a way of adding up. To avoid getting yourself into a hole, look back on each and every expense you incurred and then draft a tentative budget for 2014. Attention to detail is key!

We realize that it can be difficult to predict every single expense that you will encounter next year, so try to revisit this budget quarterly, monthly, or more to stay up-to-date and to adapt as your budget does. As we mentioned in Strategic Planning Part 1, there’s no shame in getting a third party to assist the strategic planning process. In fact, your company’s tax advisor should be involved in working out a year-end budget plan that’s tailored specifically for your business. While our general tips and advice can be a great guide, nothing can replace the opinion of an expert who knows the ins and outs of your business.

Again, get down to the nitty gritty details if you can. The better your budget forecast is, the less time you’ll spend worrying, and the more time you’ll have for being productive. To help you prepare your budget, here’s a brief list of common expenses you’ll need to account for in 2014, on top of fixed and overhead costs:

  • New equipment (includes subscription renewals and services)
  • New & prospective hires
  • Taxes
  • Pay raises and bonuses
  • Loans
  • Charitable donations

On the same token, take a look at your cash flow and make sure you are keeping in mind any predictable rises in revenue. Leveraging seasonal sales spikes may set you up for an enviable amount of surplus – in which case you can consider maximizing your budget with company outings, green initiatives and more.

We can’t say it enough: don’t wait! Getting a head start on budgeting will set you up for a profitable 2014 with smooth sailing ahead. Watch for part 3 of our strategic planning series, soon to come.

Be sure to read our full 3 part series on strategic planning:

Part 1: Are You Ready for 2014?

Part 2: How to Prepare Your Budget

Part 3: Evaluate and Assess Your Staff

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