If your company year end is 31 March, you’ve got to have your budget nailed down by the end of the month
Author: Russell SmithFebruary 24, 2012
31 March is the most popular year-end, mainly because it ties up with the corporation tax financial year (and almost ties up with the personal tax year-end – 5 April *).
So if you have this year-end, a question – have you completed your budget for the next year?
I’ve blogged before about how powerful budgets are but the thing I didn’t mention is that they do, and should, take a bit of time. Since budgets are not just about putting a load of numbers together, or the classic – “let’s go for 5% higher profit than last year”.
I think that the planning for the budget is the most enlightening part, since it forces you to think about the business growth and how the marketplace is going to affect your business in the next year.
Question such as:
– What product or service line is the one to focus on?
– What product or service line do we need to stop?
– Who/when do we recruit?
– Have we got enough cash for our growth plans?
– What are the threats to our growth?
– How much do we need to spend on capital expenditure?
– What will be the product/sales mix in the year?
– How much should we spend on marketing?
and many more….
The point is, you won’t know all the answers and won’t be able to predict the future. That isn’t what the budget is for. The point is, you are forced to take a hard look at your business and assess the direction, strengths, weaknesses.
After all of this, you will be left with lots of numbers BUT the thinking behind them will have given you the insight into what works in your business and what doesn’t.
Tomorrow, how do you pick the profit target.
*Have you ever wondered why the personal tax year is 5 April and not a date at the end of month? I’ll tell you the story at some point – I found it incredibly interesting, but actually most people will find it baffling and tiresome.