Remember: Using realistic figures is key to attain a budget that is as accurate as possible.
Knowing how to plan for your business budget starts with knowing when to begin.
Ideally, the business budget should be created on an annual basis for the upcoming year.
Using one standardised budget model and one set of templates will also help to streamline and simplify the process.
Decide on using either a bottom-up or top-down budget target setting model.
Next would be to bring this information together and set KPIs for the year ahead.
Three KPIs every business should set and monitor are: Target sales revenue.Erwan Philippe is the head of SAP Business One Asia Pacific Japan, which also includes Greater China.Working in the APJ region for over 15 years, his career spans over 13 years in the IT sector, which includes various leadership positions in sales, business development, and operations.Let’s not confuse the difference between budget planning and cash flow planning.A budget report details the current financial performance of a business while cash flow planning details the inflows and outflows of money through a company.Sales representatives looking to hit their targets might be tempted to shift sales from a period where revenue is high to a slower performing period.This will skew the end result of the budget report and end up in wrong decisions being made.Budget planning allows you to identify revenue sources and expenses in a way that allows you to make executive decisions that optimise operations and your bottomline profit.A robust budget plan begins with identifying the essential components of your annual business planning process.The more sources you can segment out with clarity, the better, as this will aid in identifying which income source needs more attention. Projecting your sales for the upcoming year should be done as accurately as possible with a conservative bias if you are unsure about business in the year ahead.A good basis you can benchmark your revenue projection against is last year’s actual sales figures and growth.