Ways to Make Budgeting And Forecasting Easier
Embrace the process, execute based on data, and analyze results
One way to make budgeting and forecasting easier is to embrace the process, then execute the data. Most importantly, you need to analyze the results.
There are so many excuses as to why one does not do the work to prepare a budget/forecast. Some common examples are:
It takes too much time
It is distracting
It is unreliable
It's necessary to understand there is a cost of inaction. Without proper budgeting and forecasting in place:
Operational plans may not be in sync with sales strategy
Inventory flow may be off
Cash flow may be in jeopardy
There will be a general lack of financial insight
An excellent way to ease the process is to break it down into three segments:
Sales
Operations
Finance
Once you have the three segments, integrate them into a final product outlining the KPIs to measure progress during the budget year.
If you have a dashboard, monitor the KPIs daily —actual versus forecast. Every month, take the time to review the working budget versus the actual reporting. This process will allow you to react and pivot your business to avoid lost sales and unnecessary expenses.
You will reap the rewards as you work ON your business and not IN your business.
Larry Reines, Owner at TAB Northern Valley - Bergen County, NJ
