As a small business owner, you may not have the time or the financial
expertise to establish guidelines for predicting income and expenses.
Sy Schnur CPA's, CVA & Consultants Associated does because we have
the quartette disciplines of being CPA's, Business Valuer & Financial
Planner & Attorney. We have the knowledge in financial as well as the
multiple business experiences to work with you toward developing
effective budgets.
Benefits Of Using Budgeting
Creating a budget for your business on an annual basis allows you to
review the business' overall operations. Budgeting also permits you to
identify those factors that are the key to success of the organization.
These factors can be closely monitored throughout the year and
adjustments can be made for critical elements and changes.
Communicate Expectations.
A budget documents your goals and expectations for a given time frame.
You may want to share budget information with people inside your
organization and with significant third parties, such as your advisors
and bankers.
Anticipate Your Cash Necessities
Cash flow is the life-blood of any business. Budgeting allows you to
look at anticipated sources and uses of cash to determine cash needs at
various points in the year. These estimates can be helpful in
determining if there will be sufficient cash flow for the year's
operations or if additional sources of cash will be needed to attain
your periodic needs. Projecting monthly cash flows allows you to show
flow of funds indicating when you will need funds and plan accordingly.
Monitoring Budget Vs. Actual Activities
Most likely, actual business results will differ from your plan. By
comparing actual to anticipated performance, you will be able to examine
the variances and determine the business factors which caused these
differences.
Plans Enhances Your Ability To Make Decisions
The information derived from comparing your budget to actual results
will enable you to modify some of the operating elements of your
business. In this way, a budget may lead to more practical
decision-making.
Budget Basics
The process and mechanics of budgeting vary by organization. Generally,
budgeting consists of the following three phases. Each stage can provide
valuable insights into your business.
- Research
Your Revenue Position.
Who are Customers? Who is competition? What economic or
technological changes are occurring that may affect your revenue?
These and many other questions about your market and your position
in that market must be addressed. After carefully evaluating these
factors, you can establish realistic revenue goals.
Understanding Your Business Cost Structure.
To generate the desired sales volume, you should recognize the costs
involved. What costs are incurred in a year? Which costs are
variable and which are fixed regardless of the volume of business
activity? Are there unusual, nonrecurring costs which should be
anticipated? All costs should be estimated based on the volume of
business activity.
Spend Time To Research Your Competitors' Firm.
What markets are your competitors focusing on? How well do you
compete with others in your market? What are competitors' revenue
and costs? How are their cost structures different from yours?
Understanding the revenue and costs of other competitors in your
market can help provide guidelines for evaluating reasonableness of
your own cost structure. Where, how and why would you benefit by
making changes in your operation?
- Documenting & Going Over Budget To Find The Whys?
By itself, the budgeting process is helpful, but many more benefits
can be gained by documenting & reviewing each item in the final
budget for reasonableness and reality of accomplishment. To ensure
that your budget is an effective management tool, you must be able
to compare budgeted and actual results. A budget which measures
sales by type must have a reporting system which provides this
financial information.
- Analyze The Information To Determine What Changes Can Be
Effectively Made.
With the information derived from the research phase and an
understanding of your own goals, you can analyze possible revenue
and expenses for the next year. After analyzing these alternatives
and evaluating the impact of each on the future of your business,
you need to decide on one set of revenue and expenses to represent
your realistic expectations.
Summary Of Where We Can Help You Run You Business More Effectively
Creating a useful budget takes time. By using Sy Schnur CPA's, CVA &
Consultants Associated, and our foursome license specialties of
being CPA's, Business Valuers, Financial Planners and Attorney's we can
help you make the most of your time by guiding you through the budget
process and offering you sound advice in setting realistic objectives.
Because of our broad backgrounds and expertise in business matters, we
are totally qualified to conduct a thorough financial examination of
your business. We can then work with you or any of your representatives
to develop a formal budget which meets your financial goals:
