Published on: November 25, 2014
It is hard to believe that 2014 is coming to a close soon. Now that we are in the fourth quarter of the year, much of the focus of your business is likely on preparing for 2015. With all of the planning that goes with this, it is to be expected that budgeting is a central focus. Now is great time to consider what opportunities exist for new business and to take a look at the reality of your expenses and profits to adjust where needed. A realistic view of sales, profits, and expenses is essential to an accurate budget. Remember that tracking actual results compared with the set budget is important so adjustments can be made before it is too late and the damage has already been done. To simplify and remove human error from this budget process and data, consider upgrading or updating your financial software at the same time. This, too, can save money and help your business to further its success through error elimination and streamlined information. Learn more about the accounting and financial software solutions that Mindover Software has to offer for your business by visiting here.
Because profitability is likely at the forefront when assessing, analyzing, and updating budgets, here are some suggestions to keep in mind to maximize this.
1. Figure out your 2014 tax liability to incorporate into projected expenses come tax time.
Now is the time to figure out what your actual liability is going to be for the tax year 2014. Get help from your CPA in calculating how much of a check you are going to have to write in April. There are rules as to how much you need to withhold this year to avoid penalties. Your accountant can make suggestions on how to reduce your tax liability by making contributions to a retirement plan or health savings account, taking accelerated depreciation on fixed assets purchased in the current year, etc.
2. Plan your 2015 strategy instead of focusing only on what happened in 2014 (because this cannot be changed now anyway).
How will you plan ahead for the year ahead? Will you grow and how? Are you changing your management model to increase sales or improve internal efficiency? What marketing needs do you have? Will you go after new markets or introduce new products?
3. Turn your desires and vision into reality by converting them into action steps.
Dreams are not possible until they are down on paper and have been factored in from a financial standpoint and put into action. Only then can they truly become reality. What assumptions do you need to change? Will you add any one-time or recurring expense as a result of your strategy? Those assumptions should include two factors– internal and external. What was your average growth rate (internal) last year? For the last three years? Be reasonable, and compare your assumptions with industry forecasts and benchmarks provided for your industry by third parties (external).
4. Create your 2015 Budget.
Start at the bottom and work up. How much profit do you want to make? Add your expenses on top of that to derive your revenue number. Is the revenue number reasonable given the internal and external factors in tip #3 above? Use your financial software solution to assist you in this process and as a means to record all of this data.
Although these are a lot of questions to consider, they are important to ask and will help you maximize profitability. Remember that creating a budget is limited in its effectiveness and prone to error without financial software. Budgeting in the business world of 2015 demands having a software to keep up with and structure the complexities and figures involved in a budget. Contact Mindover Software to find the financial software solution that is best for your business as we move into the new year.