As we are heading towards the end of another financial year, now is the time to start planning for the next financial year. In business, you need to set goals for what you want your business to achieve in the next twelve months.

I often get told by clients that “I don’t know what my sales will be next month, so what is the point in preparing a budget for 12 months?”. To answer that, I tell them the reason we set a budget is to see what the business is capable of achieving over the next twelve months. Sure, it’s not going to be 100% accurate, however we can take corrective action if our results are heading in the wrong direction.

When man first landed on the moon, years of planning when into achieving this monumental event. The fact is, the amount of time spent heading in the right direction was only a staggering 10% yet it was still able to achieve its goal.

In business, unlike travelling to the moon (which is life threatening) you all have the ability to plan and set goals. Research has shown time and time again, that people who set goals are higher achievers than those who don’t.

To me, having a budget provides you with a focus – it can tell you what your cash position will look like from month to month; it can be re-set if results are not close to what is anticipated. By constantly reviewing the budget, it can be updated so that you can continually monitor your cash debtors and creditors position.

It looks as though we are heading into another year of uncertainty with the International Economy and the upcoming Federal election. The more you monitor your businesses performance against your goals, the more likely your business is to survive.

Author: Tim Sargent