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Why does my business need a budget?
Clear Vision • May 29, 2018
We hear this a lot! Often goes along with, “ I can pay my bills and wages – why worry?” or “I do the work, pay the bills and just spend what’s left.”
If this sounds like your approach we offer the following reasons why you should talk to us NOW about getting a proper budget in place for your business or personal situation.
- See what’s coming – Setting a budget at the beginning of the year can help you see problems or other issues that you need to address ahead of time. Key decisions around staffing, equipment, materials, space and cashflow can be made with careful consideration – not in a rush when you’re taken by surprise.
- Get everyone on the same page – Your business probably relies on a range of people to make it function effectively. Setting a budget that everyone knows and understands makes it easy for everyone to work in the same direction. For performance driven staff it can also make it clear how the connection between the money they generate for the business, the money they are paid and the sustainability of the business is connected.
- A critical measuring stick – As Zig Zigler said, “If you aim at nothing, you will hit it every time.” A budget lets you measure and track your performance against your expectations. If you’re not hitting those expectations – what’s the cause?
- Financing or Exit Strategies – Being able to demonstrate a history of setting budgets and working to them – whether they are 100% successful or not – is one of the strongest ways to demonstrate to a financier that you are capable of repaying a loan. If you’re considering an exit strategy a budget set out over several years showing how the business has developed will help reassure a potential buyer about what they can expect.
- Keeping your wallet closed! – Your business spending is far more likely to be kept under control when money is allocated within a documented budget and unallocated spending is either not tolerated or kept to a minimum.
- Spending & Profit connected – It’s surprising how often smart business owners don’t connect their spending directly enough to their eventual profit. With a properly formulated budget you can see immediately how an increase in spending will impact the amount of profit in your pocket at the end of the year.
If you need help getting a budget set for your business please contact us to arrange an appointment to discuss.
The post Why does my business need a budget? appeared first on Clear Vision Accountancy Group.
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Boosting Your Superannuation: Seven Powerful Strategies
When it comes to being a Director of a company, there are administrative requirements that must be complied with, including keeping ASIC in the loop. We all hate paying unnecessary fees, and ASIC loves to charge fees. To avoid late fees, ASIC must be told about any changes to company details, including your business or residential address, within 28 days. If your company's information changes, please let us know so we can notify ASIC on your behalf. Example: Jarryd gets a late fee Jarryd recently moved his company to a new storefront. In the rush of changing to his new principal place of business, he forgot to update his address details with ASIC. A month later, Jarryd logged into his online account to change his address to reflect the address of his new principal place of business. Because it was outside the 28 day timeframe, the company was charged a $93 late fee. If he had waited longer and lodged the change of address more than a month late, the company would have been charged a $387 late fee. To avoid fees in the future, Jarryd realises it's important to update his details as soon as they change. In summary, be like Jarryd and realise the importance of advising Clear Vision Accountancy Group of any changes. Example supplied by ASIC
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