Budget Forecasting: A pivot point for Start-up and Small Businesses
Your start-up or small business can be alike a train, a little hard to accelerate at the start of the journey but a smooth efficient machine once a speed has been established. Acquiring and having control on both resources and cash are common challenges faced by and crushing the dreams of new and smaller businesses. With the vast majority of start-up businesses failing within the first 3 years of being established, this budgeting issue is often noted as the most common undoing, and one that we are able to assist with to a degree.
You may have the idea, the clients and seemingly everything under control, yet still fall into a common trap for start-up and small businesses: Cash flow troubles. These cash flow troubles can be less of an issue with well made budget forecasting.
A budget forecast is a financial tool that keeps track of and predicts where incomes and expenditures will arise over a timeline. You may have a positive income aligned for the year in total or a potentially big client, but if you don't have the funding to maintain the business until and beyond that point then your efforts could all be for naught, undone by an inability to cover a simple overhead cost such as rent for a few months, of the food that feeds your restaurants' kitchen, or the staff to last until the peak season. This could apply in a number of ways for different kinds of businesses though I believe we all understand the concept well.
Having an accurate budget forecast doesn't just keep you from falling into a trap, it also will provide clear points for key investment periods and times when you may be in a better position to take a more risky action to grow your business. This may also predict times where you can take on new staff, increase marketing activity as well as purchasing of software or equipment.
The Great Bean Counters believe that having a good relationship and clear communication skills are pivotal in providing more accurate budget forecasts. After all the more understanding we can attain from you about your business and quantify or note risk of variability the better the report, and these things generally emerge from strong relationships where the accountant genuinely is interested and cares about your business. We at The Great Bean Counters are rare socially involved accounting firm who enjoy reaching out and engaging with our local and wider communities. We would take great interest in learning about your business, how it works and assessing how we can adjust a budget forecast to be more accurate and be aware of variables.
Once your business is established, the budget forecast for cash flow projection can be entered into your accounting software (we suggest and can assist in setting up Xero) and used as a great tool to compare budgeted vs actual results to keep you, as a business owner, accountable to your numbers. With a budget forecast we can assist you in reaching for your ambitions and goals with more secure footing and that bit less uncertainty during a potentially nervous period.
We would love to hear about your business dreams and do what we can as accountants to help you grasp them.
