Business Budgeting: it’s more than an ‘add-on’!

Have you been on holidays recently away from your home in (or about) the Redlands?

Did you take a punt on how to get where you were going or did you use your mobile phone for traffic holdups or places to stop along the way?

And what has this to do with business budgeting?


How familiar are you with the numbers in your business? These are the basic numbers such as sales levels, staff wages, product purchases, rent and utility costs, profit.

All these figures are signposts similar to what you see on the side of the road. They won’t get you to where you are going but they might suggest how far away you are from your destination.

But, what if you don’t know where you are going? Then the signs may simply tell you no more than where you are.

Looking back to look forward.

Do you know how those figures have differed from a previous period?

Differences raise questions such as ‘What has changed since back then?’ and, more importantly, it raises the query as to why the figures have changed. Perhaps the figures haven’t changed and, again, the ‘Why’ question remains.

It takes us away from the signposts and brings us back to concentrating on the road. What has been the condition of the road since you left and the amount of traffic and that ominous persistent rattle somewhere under the bonnet?

There are parallels here for your business. You need to know how you got to here from back there. How difficult was it? And how were you slowed by other similar businesses that you seemingly were unable to differentiate yourself from? And is your business fine-tuned or a bit clunky?

Your destination: here or further along the road?

If you don’t have an answer to the above question, it may as well be here!

You have used your business figures as signposts to look at the past and now you have to decide if they can tell you something about the forward journey.

Projecting historical figures into a future scenario is budgeting because it enables you to track progress using quantifiable signposts.

However, they won’t get you to where you want to be. To do that (and to use the travel scenario) you’re going to need good tyres, adequate fuel, knowledge (as much as possible) of the road ahead, minimal distractions, and maximum support!

Birkdale Bookkeeping Services isn’t a travel agency but we can help you in how your business progresses from here to wherever you want it to be.

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