It’s hard to believe, but 2022 is drawing to a close. For many office professionals, that means annual budgeting season, when you take stock of expenses and revenue to make projections for the next 12 months. It’s critical to ensuring your business remains profitable, but it can also be stressful.
It may be tempting to put your annual budgeting off to the last minute and dive in head-first with the hopes of knocking everything out at once, similar to pulling an all-nighter in college. However, with some planning and a more thoughtful approach, you’ll put together a budget that’s more effective and save yourself a headache or two.
Keep these tips in mind for your business’s annual budgeting season:
1. make a schedule and put a team together
Budgeting takes time, and it’s important to plan ahead. Set a deadline and create a schedule with milestones to help you stay on track with the process. Keep in mind, too, that you’ll probably need to pad the schedule to allow time for reviews, adjustments and inevitable delays.
Of course, budgeting is a team effort, so it’s important that you create a team with the appropriate players from across your organization. Be upfront about challenges, seek their input and thank them for their contributions.
2. do your research
When it comes to budgeting, you can’t just put numbers down and hope things work out the way they’re supposed to. For your budget to do what it’s supposed to do — rein in expenses and maximize revenue — you’ll need to do some research upfront.
Most importantly, analyze your historical data to understand how your organization’s cash flow and expenses change throughout the year. With salaries rising fast, you’ll also need to plan your company’s annual investments around talent acquisition. Armed with this information, you can better anticipate when you’ll need to limit expenses and find ways to save some money.
Finally, do some industry benchmarking. This helps you understand revenue trends among businesses similar to yours. The Internal Revenue Service (IRS) has statistics that can be helpful with this part of the process.
3. track and monitor
When you create your budget, you’re making your best estimate of how the year will play out financially. That means you can’t set and forget things. The data you gathered during your research will give you a roadmap, but the budget you make now is vulnerable to circumstances and events (just ask anyone who had to rip up their 2020 budget when COVID hit). Assess your budget at least once per month and make any adjustments necessary.
Several accounting tools, like QuickBooks, make it easier for business owners to review spending and expenses. Invest in one of these tools to stay on top of your revenue throughout the year.
Annual budgeting season can be stressful, but try to delegate whenever you can so that you don’t get bogged down in the fine print. Keep your eyes on the prize, maintain a positive mindset, and you’ll set your business up for success in the coming year.
Don’t wait until you hit a roadblock in your budgeting process before getting the insights and solutions you need. Find out how Randstad can help today.