It’s 1 April 2017 and for us business owners its the day that we get to wipe the slate clean and start all over with a new financial year.
I have lots of people ask me about budgets – do I need one? If so, how and where do I start? How do I know if it is right or wrong?
With this in mind I wanted to share some of my tips for making a budget;
- I like the ‘bottom up’ approach to budgeting. Start with a number and then work up from there, taking into account fixed expenses, variable expenses, any other income and then arriving at a sales/income figure that you need to earn to make the bottom number work.
- When using the bottom up approach, set the bottom number as something that will create drive and passion – it might be money for the cover the household costs, a family holiday, new car or boat, house renovation, whatever it is, if it is something real rather than just a $ figure you will be more invested in executing it and seeing it through.
- Create mini milestones along the way, and when you achieve them reward yourself.
So what does my 2018 bottom up budget look like?;
- My bottom up budget number is a new deck and garage reno project.
- I have used my March 2017 data in Xero to take into account my fixed costs likes salaries and rent
- I have also taken into account my variable costs like power, using the March 2017 year figures as a starting point
- And I have arrived at a revenue figure that I need to aim for to bring it all together.
- I have then split these income and expense figures into months from April 2017 – March 2018
- Along the way I have set milestones for each quarter, so June, September, December and then March 2018.
- And I have set rewards for achieving these milestones, the first two being the new Samsung S8, and a trip to Melbourne in September for Xerocon 2017. Both will keep the first 6 months in focus and exciting.
So what is your March 2018 bottom up budget number?
If you need a hand working on the above process or arriving at your bottom up budget target, working with the other numbers to arrive at your top line revenue number, setting the milestones and rewards, or more importantly implementing and executing the plan then as always I am only a phone call or email away.