Top down or bottom up? Building your business budget
By Ben Gay, Salisburys Director
Once you’ve defined your Action Plan, it’s time to understand what this means financially for you and your business.
Start to build your budget. Why do we budget?
Quite simply, making sure the goals and targets you’re setting, and the action required to achieve those targets, are going to make the money you need to fund your business and lifestyle is achieved using a financial plan.
How do you build a budget? There are a couple of ways you can do this:
- You can use a top-down approach looking at the high-level numbers, or
- You can build it using a bottom-up approach where you go into far more detail around units sold, etc
At the end of the day, as long as you identify the key activities and map out what they’ll cost, we really encourage you focus your time on this. Be conservative to some extent when forecasting what you think each activity will deliver in terms of new sales. Then you’ll have a budget that will give you a good guide as to where you’re going to end up.
How do you use your budget?
- A budget is really a great reference point to identify how you’re tracking against plan financially
- It allows you to identify areas of additional spend that you didn’t account for or potentially underestimated and proactively manage those, and
- It can also be used to assist you in forecasting where you’ll actually end up as the year progresses as you combine the actuals and the remaining budget months.
At Salisbury Accountants & Business Advisors we believe that good business advice is not just about numbers; it’s partnering with business owners to solve personal operational and strategic challenges.
We listen to business owners and offer a range of accounting and business services to deliver actual advice tailored to your individual needs. Call the team at Salisburys on 02 6041 3014 or visit salisburys.net.au to get your business planning underway in Albury-Wodonga this financial year. Read more about the difference Ben Gay can make to your business budgeting »
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