Budgets cause excitement, frustration and provide a path forward. They’re a starting point…a plan. And that’s important to have both personally and for your business.
When considering making a budget, the adage “Garbage in, garbage out” is a good reminder. If the budget doesn’t reflect reality and take into account events that have happened or will happen, then the budget is not useful.
Below are tips to consider so your 2023 business budget is an effective one.
Review the Prior Year’s Results
To look forward, you must look back. How did 2022 turn out for your business? Did your revenue meet expectations? Were your expenses in line with expectations?
Answering these types of questions to analyze the prior year is an important step for looking ahead. Many companies have goals of increasing revenue by XX% or reducing expenses in a particular area or department. However, until the numbers from the previous year are known and analyzed, any new goals are arbitrary.
Consider Areas of Improvement or Change
When budgeting for the next year, you need to carefully review areas where cost or revenue improvements could be made. Is there a certain software or automation tool that would assist your business? After all, those tools are created to save time, streamline processes and cut costs in the long run. Is there a specific market that you want to explore, or perhaps you’ve already tested the waters there and weren’t successful? If there’s an underperforming product or service, should it continue to be offered in 2023? Should your business “lean in” harder in an area, or stop altogether and put energy and resources elsewhere?
Bottom line, business owners shouldn’t continue doing what they did last year without considering how to improve or change based on the outlook for 2023.
Is Current Staffing Appropriate
Many companies start with employee expenses when budgeting because it’s a major cost. Therefore, asking hard questions is critical. Does your business have the proper team in place to accomplish 2023 goals? Would hiring additional employees to accelerate a goal project that has been waiting for a while? Should you add new benefits for team members or restructure the benefits package?
These considerations are vital as companies prepare a budget for the “people side” of business. Many companies are labor heavy, so it makes sense to think about the employees themselves, plus the associated expenses to paying those workers.
Morgan & Associates Help with Budgeting
Creating a budget can be frustrating and confusing. If this is the case for your business, don’t go it alone! Complete the form below to have one of our trusted accountants at Morgan & Associates reach out to help your company with its budget