For many businesses, summer can be a slow time of the year. With the kids out of school, vacations and a host of other things to keep us busy, a lot of businesses experience a brief slowdown during the summer months. If you’re in this position, you can take advantage of the slowdown by reviewing your business budget, taking some time to look at the year so far and think about what the rest of the year might look like.
Review Your Budget
At the beginning of the year, we recommend to our clients that they create a financial budget for the upcoming year. As the old saying goes, failing to plan is planning to fail. Creating a business budget includes forecasting the revenues and expenses you expect your business create throughout the fiscal year, and reviewing your budget during the year gives you a chance to see if a business is performing as expected.
If Performance Meets or Exceeds Expectations
If your business is performing as expected or better then reviewing your business budget will be a happy experience.
But even if you are making more profit than you forecast, you should dig deeper into the numbers and understand why. Was it because you sold more products and services than you expected to? Were your expenses lower than what you had forecast? Were your cost of goods lower?
Looking at why your business performance was at or beyond expectations will put you in a better position to keep doing more of what’s working for your business, making the second half of the year even better than the first.
But it also allows you to prepare if things don’t go so well during the rest of the year. What happens if there’s a spike in your cost of goods? What happens if sales slow down? Can you maintain profitability if your business had to absorb an unforeseen expense?
These are all worthwhile questions to ask yourself while reviewing your business budget.
If Performance is Lower than Expectations
If your business didn’t perform as well as expected then reviewing your business budget might not be as much fun. But even if you aren’t making your numbers, it’s still a very worthwhile thing to do, and once again you should dig deeper into the story that the numbers tell.
If your revenues are lower than forecast then you should ask yourself why. Were you too optimistic when you were creating your budget? Did something happen during the first half of the year that caused your sales to suffer? Is your business seasonal, and will sales for the second half of the year pick up enough to get you to your target?
If you expenses are higher than expected, again you should ask yourself why. Did you underestimate how much it would cost to run your business? Have you absorbed a sizeable portion of expenses that isn’t in line with your business activity? Will the expenses for the rest of the year be lower than what you’ve incurred so far to get you back to your forecast? Can your business continue operating as it has for the first half of the year?
Don’t Have a Budget? Make One!
If you don’t have a budget for your business, take this chance to make one for the rest of the year. Creating a business budget will allow you to review the performance of your business throughout the year so you can gauge how well your business is doing and make changes to how you’re running your business if it’s not performing to expectations.
Let a Bookkeeper Help!
If you’ve never created or reviewed your business budget, hire a bookkeeper to help. A professional bookkeeper will help take you through the process of creating a business budget – forecasting revenues, expenses and profit. An experienced bookkeeper will also help you forecast reasonable numbers so that you can use your business budget as a valuable tool for maintaining or growing your business.
The Bottom Line
If your business has experienced a bit of a slowdown during the summer months, you’re not alone – it’s a common thing for many businesses. But instead of just counting down the days until your customers get back to their desks, try reviewing your business budget to see how your business has performed so far this year, and dig deeper into the numbers to find out why it has performed as it has.
Simply Bookkeeping1 provides professional bookkeeping services for freelancers, solopreneurs and owners of unincorporated and incorporated businesses. We customize our services based on your needs – we only see some of our clients a few hours a month but others we see on a more regular basis. Our services are reasonably priced and we tightly track the amount of time we spend working for you so you only pay for the services you get.
To learn more about us, please visit our website at www.simplybookkeeping1.com or contact Michele Hyde by phone at (647) 668 – 9363 or by email at firstname.lastname@example.org.
Have Your Say
Have you reviewed your business budget? How is your business performing? Were you surprised by any of your forecasting? Leave us a comment and let us know what you found out. Also, please share this article using the social media share buttons – other people might also benefit from creating and reviewing a business budget and might enjoy this post.