Tracking your figures is a simple way to keep up to date on how your business is performing. But lots of business owners aren’t doing this one simple thing that can help aid business growth.
BizSmart Select Member and accountant Simon Cook of SRC Accountancy Services explains how business budgeting can be a powerful tool for business growth.
Do you create budgets and cashflow forecasts for your business?
If you don’t, then now is a good time to start. Get hold of your last set of accounts, or the figures you put on your last tax return, and you can pull together a straightforward budget that will help you plan the next twelve months.
Keep it simple – enter last year’s figures into a basic spreadsheet with incomings and outgoings, then estimate what you think your sales will be for 2017. Nobody can predict the future, but you know what’s happening in your business so you can have a “best guess”.
If you feel your business is growing at a steady rate, you’ll want to increase the sales figures to help you project your future figures. Or if your business sales are pretty stable right now, you can use last year’s figures as they are, as a basis for your budget and forecasts for the next couple of months, with an increase later in the year.
Basically, you’re looking at your expected sales versus your projected expenses and outgoings.
Then when you total up the figures, your income minus your expenditure will give you your likely annual profit or loss.
Are you tracking figures for your marketing spend?
Have you earmarked a budget for marketing? This is absolutely necessary. Your business won’t grow on its own, so how will you generate the sales you’ve predicted for 2017?
For example, if you increase your marketing and advertising spend on activities that you already know to be effective, this should increase your sales.
Are you tracking your income and outgoings each month?
Tracking how much money you’ve made each month is a really good habit to get into, so you know where you are, and what activities have had an impact on your figures.
That way you can see what you did differently and see the impact it had on the cash into your business in a given month, rather than looking at the figures months later when you do your tax return.
A lot of business owners don’t do this monthly check, so just engaging with your accounts in this way will put you ahead of some of your competitors.
Do you record where new business has come from?
If you don’t keep an eye on where your customers come from, how can you focus on the customer acquisition methods that work well in your business?
Put some simple tracking in place in your business, check your figures every month, and you’ll find this has a positive impact on your business.
BizSmart aims to help SME and micro-business owners scale their businesses and create value through sound practical business support. We aim to give you insight and clarity and fire up your determination to succeed. You can access blogs like this and more besides through our free SmartRoom service here.