How to Budget And Forecast For Your Business

Morgan Blogs Part 2 (2)

The best way to see where you’re going is to know where you’ve been.

This quote (roughly translated from the timeless Maya Angelou) 100 percent applies to your business finances.

In order to plan for your business future, we’re going to go to your financial past.

It’s time to pull reports from your previous financial years.

Now that it’s almost the end of the year, certainly, your books are all in order, ready to close them out.


If they’re not, you need to call us ASAP to get them straightened out.

But if you’re ready to move forward, let’s jump into the best steps to forecast for 2022.

Step 1: Pull previous years’ reports

Access the last 3-5 years of financial data for your company.

Once you pull those reports, identify patterns of expenses and you can forecast what you’ll spend in each category.

If you have enough data, you should have a fairly accurate estimate for the next year. Break out how much you can reasonably anticipate for each month.

The same is true for sales.

Step 2: Note trends of dips and peaks

While you might not be able to guess the exact number of sales for 2022, you can predict what each month will look like based on the years of data you’ve already collected.

This is a great opportunity to utilize strategic marketing for the high and low months of the year. Where can you take advantage of sales or targeting marketing to help keep the bottom line steady through previous years’ times of ups or downs?

Step 3: Budget accordingly

While the pandemic has likely impacted budgeted areas for your business, you can use the data from the last two years to know how much you will be spending on operational costs.

Do you have any large-ticket items that you need to replace? Now is the time to budget for the expense. Can you save incrementally? Or is it worth taking out a loan?

A proper budget will account for your business goals for the year.

Step 4: Forecast based on data

It’s vital that you find the ideal balance between spending and saving. Start by listing your goals and how much achieving them will cost.

Your priorities might be areas like salary or expansion plans or paying down debt. From there, decide how much of your budget to allocate to each of your goals.

Additional benefits of careful financial planning include:

  • Managing your debt load
  • Understanding your cash flow and identifying streams of income
  • Making confident investment decisions
  • Setting money aside for emergencies

Wrapping up 2021 with a bow

Setting goals, budgeting, and forecasting for 2022 is an important part of the end of the year.

If this whole topic overwhelms you, don’t worry.

We get that.

Not everyone loves finances and financial planning and projections.

Lucky for you: Expert budgeting and forecasting help is just a phone call away.

Give us a ring at Morgan & Associates, or fill out the contact form below today so we can set the course for 2022 together.

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