How do we find new ways of doing things in uncertain times? The Covid-19 pandemic has revealed that many businesses were simply ill-equipped to handle a sudden global economic meltdown. Let's take a look at how you can set up your Annual Budget during these unfortunate times.
Tim Proome, general manager of supply chain services, Tarsus Distribution.
As we prepare to head into a new year, uncertainty, fear and insecurity are common sentiments, making the annual budgeting and planning process especially challenging.
Budgeting identifies available capital, provides an estimate of expenditure and anticipates inbound revenue. It’s crucial to budget well in these uncertain economic times.
Here are 5 tips on how to get it right:
1. Identify Your Financial Goals With Your Annual Budget
What do you want for your business in the coming months? Do you want to increase cash flow? Do you have a tangible goal such as saving enough money to buy a particular piece of equipment? Do you want to collect more customer data? Are you aiming to reduce debt? Knowing exactly what you are budgeting for is an essential first step to moving forward.
2. Use The Right Data
The inability to access the right data, tools and resources are all barriers to better budgeting decisions. Use accurate, historical data to inform your budgets, such as your business’s latest sales analytics, up-to-date books, and accurate financial statements.
3. Design Different Forecasts For Your Annual Budget
Uncertainty makes it difficult to plan, so take different possibilities into account. Create forecasts that look at meeting your revenue goals, exceeding your goals and falling short of your goals. These discrete scenarios will enable you to make informed projections and budgets accordingly, determine what success and failure will look like, and to be better prepared for every outcome.
4. Update The Annual Budget Regularly
Developing short-and long-term business objectives will empower you to create a road map for financial success and to identify opportunities even in the most difficult of times. Because uncertainty is everywhere, it’s vital to review and update your budget regularly to maintain a sense of reality. An up-to-date budget will help you manage your cash flow effectively and identify what needs to be achieved in the next budgeting period.
5. Build A Partnership With A Trusted Third-Party Logistics (3PL) Partner
This is a good time to rethink the full life cycle cost of procuring, holding, distributing, and disposing of your stock. It has never been more important to deliver the right product to the right place at the right time, at the right price.
Outsourcing to a 3PL provider will enable you to focus on your core business, while they manage your logistics and distribution. Most importantly, a 3PL partner will help you to better control your budget when it comes to stock on hand, and to contain the technology and infrastructure expenses required to manage the timely flow of goods.
hereto read an informative article we found on taking an agile approach to budgeting.