If December is your year-end, it is now time to develop a budget for your next fiscal year. A budget is not that difficult to do and is there to help guide you, not to constrain you and your business. An actual budget does not just look at your income statement, but also on your balance sheet.
If you have been in business for at least 2-3 years, you should have a run rate and understanding of your annual growth each year. Forecasting not only looks at your prior years and seasonality, but also should look at the plans you have in place for generating new or increased revenue next year, which could include a new product, new pricing, or a new channel to market. The forecast should also include any expected income from customers in the new year.
Cost of Goods
Depending on your business, your cost of goods sold is most likely going to increase which includes raw materials, labour, and inbound shipping associated with selling the finished product to the end customer. It is vital to plan for this as it will affect your margin.
To budget for your expenses, you will need to have an understanding of the changes that will occur within your costs in the next year and see how this will affect your bottom line. With the changes in the minimum wage, your payroll expenses are going to increase. Once you have completed your marketing budget, this should be input into the expense line as well, along with any other changes such as increases in rent, utilities, or insurance for example. You will need to account for any new headcount or expenses that you may plan to spend this year versus previous years such as travel.
Balance Sheet Items
If you are developing a budget, you have to look at your balance sheet as well as your income statement items. Here is a list of a few items on your balance sheet that need to be planned for and have an understanding of how this affects your cash flow monthly.
RK Fischer & Associates
Our offices are located now in Sarnia, Ontario but are able to provide services across Canada for a majority of services remotely. Our local service area for onsite services is Sarnia, London, Chatham-Kent and surrounding areas.
We will provide onsite services that require at least one full day of onsite services in Windsor, Kitchener, Woodstock, Leamington, Waterloo, Cambridge, Kitchener, Guelph, Milton, Oakville, Mississauga, Burlington, Hamilton, Toronto, Vaughan, Markham, Brampton, Richmond Hill, Newmarket, and Durham Region.
For other businesses in Canada who want service onsite and are outside our onsite area, please contact us to discuss your requirements.
SUBSCRIBE TO OUR
SMALL BUSINESS INSIGHTS NEWSLETTER