Usually the first thoughts when considering a budget are: Where do I begin?” … “There’s no way to predict what is going to happen, so why bother?” … “There’s not enough time to do this” … “I can build it, but no one will ever use it.”
Regardless of your thoughts on a budget, it is a workplace reality that is here to stay. And rightly so as your budget maps out your firm’s plan for financial success.
Here are some budgeting basics:
Budgeting is the future plan of the business, and where the strategic plans are translated into financial numbers. Budgeting ensures that the firm’s plans are financially viable.
The advantages to good budgeting are:
- Enables you to better plan for the future
- Allows you to determine if the firm’s strategic goals are attainable
- Provides an opportunity to identify areas of potential cost savings
- Revenue and cost variances can be more easily identified, providing an opportunity for quicker action.
- Budget time is a good opportunity to evaluate the rate that you are charging clients. Are you profit driven or client driven?
- It is important to understand the effective rate that will be needed to bill in order to achieve the desired level of profit.
- Review the firm’s strategic plan and note activities for the budget. Separate activities into existing and new. Document your assumptions.
- Know your general ledger – it is your friend!
- Identify areas of potential cost savings—are there other vendors who may be able to provide better value and/or service? Are certain services no longer being used?
- Some costs simply can’t be controlled—recognize them and budget accurately.
“If you don’t know where you’re going, you’ll probably end up somewhere else.” —Yogi Berra
B2 IS GROWING!
We are excited to move into our new office space…please note our new suite number:
1601 Rio Grande, Suite 450, Austin, TX 78701