Do You Use A Budget? Or Throw a Dart?

By Robin Stevens, Internal Operations Coach

Budgets are an important tool in your business, not only do they help you manage your expenses, but they also help you set goals for growth and actions need to achieve that growth. You can’t just say I want to increase profit by 5% and not have a plan. Right? I guess you can say it, but without a plan it will be hard to achieve.

When budgeting I look at financial and statistical trend reports as each category within the report gives me everything I need to create a basic forecast, I look at; call volume, conversion rates, average ticket and expenses. Historical information will be the most helpful information, but you must resist the urge to merely increase all amounts by a set percentage. You must think about the goals and how these goals will affect the sales and expense of the business. Here is a list of things to think about.

  • Changes you want to make in your business
  • Potential changes within your market area
  • Key performance indicators that need to change
  • Operation changes
  • Marketing changes
  • Team member changes
  • Investment in training
  • New equipment
  • New trucks
  • Software upgrades

Let’s say in 2014 you want to put another truck and team member on the road. Here is a list of items that would affect my sales and expenses for 2014.

  • Lease payment or depreciation
  • Wages and taxes
  • Increase call volume
  • Insurance on new truck
  • Tags for new truck
  • Uniform increase
  • Benefit increase
  • Fuel increase
  • Lettering new truck

When you incorporate your goals for 2014 into your budget it becomes a tool to keep you on track. It is important to review your budgets vs. actual numbers on a monthly basis with your management team. It will help you monitor performance, increase motivation, identify any issues in the business plan, improve decision making and plan for the future.

Let’s hear about your planning process. Share in the comments below how you set your goals.


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