If you haven’t already done it, stop now, check your calendar, and clear some space – you have serious business to attend to.
We’ve all been guilty of producing a sparkling new budget at the start of the financial year, complete with a set of rules and processes, which we follow to a T – for the first two months. Then the curve balls start coming, life happens, and 10 months down the track we sit down with our accountant to realise we’re miles off from the intended destination. Sound familiar?
Reforecasting your budget may sound like a drag, and sure the chaos of the new year may seem like a less than ideal time to step back from operations, but for the sake of your sanity – and your bottom line – it’s well worth the effort.
In a survey conducted by the Institute of Management & Administration (IOMA) and Centage up to 86% of businesses reforecast in order to get a better view of where their business is standing. Why? Here are just a few reasons taking stock now should be up there on the to-do list:
Factor in the curveballs
Had a piece of equipment blow up? Received a shipment of sub-par product? Lost your star employee – and their clientele?
While you may have put out the fire and handled the immediate financial blow, the inevitable ripple effect of taking money from other departments or savings accounts will come to light eventually.
Reforecasting gives you the chance to readjust early and take control of the impact of diverting funds. And it’s not just the impact of major costs that you can nip in the bud. During your reforecasting you get the chance to highlight all the bits and pieces that may be adding up.
Haven’t used that software you signed up to last year? Cancel it. Paying out the nose for shipping costs? Change your ordering processes. Reforecasting now instead of waiting to the end of the financial year can save you kicking yourself in July, and add some added cash to your pain points.
So you check your sales reports obsessively and know exactly what’s moving off the shelves, what’s constantly being added to invoices and the markets who keep coming back for more….right? No? Well no judgement here (but you should probably start doing that) because the good news is a decent budget reforecast will bring all these shining little pearls into the light of day.
Yes it’s mind numbing, but going through six months of reports is better than 12 months, and you’ll be amazed at some of the easy pickings you can not only identify, but incorporate into future packages and promotions to maximise your profits.
The same works for losses….if you notice cash flow issues because of late invoice payments, add a small late payment fee if appropriate, and plug those small holes well before they turn into flood of issues.
Optimise your resources
So you’ve crunched the numbers, joined some dots and have a slew of insights up your sleeve…now what?
Check in with your staff. Now you’ve got some figures behind you and some ideas brewing, use your knowledge to optimise your resources and get your management team to rework
Have marketing staff or consultants? Give them your findings and make sure they adapt their strategies if needed. While major marketing activities and collateral might be hard to adjust, content strategy and digital marketing are relatively fluid and can be tweaked to capitalise on the new knowledge.
When you’ve done you’re reflecting and re-tweaking you’re all set to sail, and hopefully when July rolls around you’re a hell of a lot closer to your final destination, with a nice pay-off to boot.