Importance of Budgeting

Blog Author: Aaron Smith | September 19th, 2008

The concept of Cash Flow is king in small business; the best way to control cash flow is by having a budget.  When you have been in business for several years you can start to use historic or previous year’s figures to budget.

Each year you can expect that your rent, utilities, leasing costs and other static overheads won’t vary all that much – or at least that they’ll do so in a linear fashion when compared to the growth of the company.  However, your IT is another thing.  IT spend for a small to medium sized business is usually very erratic, in that there will be a big spend when a server needs to be installed, then very little for the next 12 months.

New Client machines (desktops/laptops) are purchased either in response to growth; to facilitate the induction of a new staff member, or to replace older machines that have failed.  When the company has a bumper month and the business splurges, IT is purchased as it is often and somewhat mistakenly seen more as a luxury than a conduit for profitable business.

By creating a budget and planning for the future, a small business can minimise this boom-bust philosophy towards purchasing IT and implement infrastructure that is well thought out, creating a positive impact on the productivity of the company.

That is where we come in.  Organise a 60-90 min meeting with us… during this time we will discuss your projections and help you establish some budget figures for the next 6, 12 and 18 months – taking into consideration any server upgrades or replacements needed and validating the worth of upgrading or replacing desktops.  We can help you put in place a timeline for when such upgrades should occur.

By doing this each year (or more often) it allows the business owner and accountant to think about the costs that might be coming up and factor them into the company’s goals and objectives, rather than finding something fails and that they are not sure if they are in a position to replace it.

We will be calling a number of clients over the coming months to see if they would like to take up the Planning & Budgeting meeting, if you would like to have this valuable discussion sooner then please call the office and we will organise a time to come and see you.

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