Heading Into The New Year… With A Plan

Trent Yesberg –

DUO Magazine Cover: January 2017

I always approach my New Year with excitement and a list of enlightened resolutions.

Come January 2nd, some of them suddenly don't seem so enlightened (like giving up coffee) and come February 1st, well let's just say I still can't run 10km. This year however, I am going to stay the course!

The new year is also a great opportunity to set your business resolutions and (unlike my previous attempts at running) setting an action plan with a clear and measurable path to achieve them.

There is no right or wrong when it comes to goal setting, just like there is no magic formula for being successful in business. Each industry, each business has it's own unique set of challenges, so there is no road map to success. One thing that is necessary though, is to plan.

That is where having a budget and a corresponding cash flow come in handy.

A goal of yours may be to increase sales. This could be accomplished by cutting your prices or maybe hiring a new salesperson. Perhaps you could advertise or have a one-off sale? There are plenty of options, BUT how can you help determine which is the smartest decision? By setting an accurate budget, that is how much money you actually have to spend, we can develop a cash flow forecast which will lay out the upcoming cash inflows and outflows of your business, based on your own data. We can even work with a set of assumptions, to forecast the likely outcome of any investment decisions you are contemplating (New vehicle? New premises?).

But what does all that produce? What good is a forecast? Well, to be brutally honest ‐ in isolation, it would be pointless.

Preparing a budget doesn't mean you will stick to it, just like setting a resolution of being able to run 10km doesn't mean tomorrow you'll run the distance. You would start off with your usual running distance and build with each run. You monitor your times, your distances. It's all helpful data. You also skip Pizza Night, in favour of chicken and salad and eventually (after a lot of sweat and blisters) you run 10km and you then set your sights on 15km.

The same goes for business.

Your budget needs to be reviewed each week. You need to actively consult the cash flow to see what bills you have coming due this month. You consider your cash flow position if you have to make any 'out of the ordinary' purchases and calculate what impact it will have.

Every time you look forward and plan, you are one step closer.

It's not foolproof, there'll always be an unexpected expense or opportunity you didn't see coming, but you'll be in a much better position to make an educated and calculated decision about your next step.

Here are my favourite tips for budgeting:

  1. Get your books up to date! How can you expect to budget when you don't know what numbers you are working with?
  2. Think ahead for the next 12 months (at least!). Don't stick your head in the sand, you need to be prepared for the
  3. Set your goals, large and You need to know where you are headed and what you want to achieve.
  4. Ask for help! Talk to a Ask your bookkeeper, consultant or accountant about how they can work with you on your journey.
  5. And finally; stay the course It won't be smooth sailing, that's business and that's why you love it.
(Originally published DUO Magazine January 2017)