It is budget time…what’s your first thought?

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.”

Brenda A. Barnes, CPA  Regardless of your thoughts on budgets, they are a workplace reality that is here to stay.  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:

  • 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.
  

Remember….

 If you don’t know where you’re going, you’ll probably end up somewhere else.

—Yogi Berra