Budgeting and business planning
Thursday, December 11, 2008
This guide outlines the advantages of business planning and budgeting and explains how to go about it.
It suggests action points to help you manage your business' financial position more effectively and ensure your plans are practical. For many businesses, the fiscal year is drawing to a close and a new one is about to begin. Does your business have a fiscal year? Many small business owners, especially in our part of the world, tend to pay little attention to this but having a fiscal year for your business is very important.
The end of the fiscal year is a period of reflection and planning. That is why this week, Business and Finance brings to you information on budgeting and business planning.
Business planning for success
When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance.
Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment.
In fact, even without a formal process, many businesses carry out the majority of the activities associated with business planning, such as thinking about growth areas, competitors, cashflow and profit.
Converting this into a cohesive process to manage your business' development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are dynamic and are communicated to everyone involved.
The key benefit of business planning is that it allows you to create a focus for the direction of your business and provides targets that will help your business grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business. Business planning can give you:
* greater ability to make continuous improvements and anticipate problems
* sound financial information on which to base decisions
* improved clarity and focus
* a greater confidence in your decision-making
What to include in your annual plan
The main aim of your annual business plan is to set out the strategy and action plan for your business. This should include a clear financial picture of where you stand - and expect to stand - over the coming year.
Your annual business plan should include:
* an outline of changes that you want to make to your business
* potential changes to your market, customers and competition
* your objectives and goals for the year
* your key performance indicators
* any issues or problems
* any operational changes
* information about your management and people
* your financial performance and forecasts
* details of investment in the business
Business planning is most effective when it's an ongoing process. This allows you to act quickly where necessary, rather than simply reacting to events after they've happened.
Author: By Kojo