A. Is my business really profitable?
B. Am I actually making what I could be making or should be making right now?
C. Where am I over spending or should I be spending more on a particular expense?
A financial forecast and budget play an important role.
First and foremost, budgeting and forecasting are getting you to think about numbers and strategies. They are the driving force that makes you want to get up and do what you have to do. Its honestly one of the tasks that really adds value.
The budget is essentially a plan of how the money is going to roll in and out for a period of time. What are the necessary expenses that are specific to your business? it basically creates your chart of accounts.
A forecast on the other hand is more big picture. It shows you what your business could look like after a period of time. What is the revenue that needs to come in to cover those costs and expenses? Its a benchmark.
Its like the protein shake or the two eggs in the morning you eat before hitting a body pump class.
Both tools will also change. If you keep up your bookkeeping — which isn’t so overwhelming when you have a plan and have an idea of the numbers, you can see what is actually happening in comparison to what you predicted and make necessary smart changes.
It could be that your original budget didn’t include an unexpected cost. Maybe you don’t need to spend as much on marketing in the next quarter or change the way you are marketing to bring in more business. Maybe you need to raise your prices. Is it a good time to hire a contractor?
These tools get you thinking BIG, they allow you to really know your business and pave a road for you to be successful in a shorter amount of time then if you are just flying blind.
Create a budget and forecast and get into that mindset.
Look for an accounting system that offers these tools and make sure that you keep your books up to date.
Visit us today and get set up the right way. Making better decisions @ Sum Bookkeeper