As we pivot to meet industry demands and the market shifts of 2021, it is imperative that we create realistic budgets for our businesses that allow us to cut unnecessary spending and generate more revenue.
If there are financial goals you would like to achieve, consider these things when creating and meeting your 2021 budget:
Identify your fixed expenses and plan for the unexpected
The first step in creating a budget is to identify your fixed expenses. Fixed expenses are definite — these are unchanging and occur on a weekly, monthly, or yearly basis. For example, a fixed expense may include rent or software subscriptions. These expenses must be taken into account before anything else.
Fixed expenses are easy to plan for. However, it is wise to set aside funds for the unexpected, as well. What expenses could arise throughout the year? For instance, a crisis resulting in a loss of inventory is an unexpected expense that you would need to be prepared for.
Adopt performance metrics to track your progress
Creating a budget is not enough to ensure your company is on track to reaching its financial goals. You must develop a system for tracking your progress, using performance metrics. Implementing performance metrics will allow you to determine how and where you must pivot and reallocate funds in order to stay on track. You should be tracking your performance regularly and making adjustments as needed.
Be realistic when planning for growth
Business is unpredictable. Some months will be better than others, but we can still plan for growth in 2021. Whether you plan to bring on new clients or increase inventory capacity, there are expenses to consider when planning for growth. Furthermore, you can expect to generate more revenue when growing your business. These things will need to be accounted for when creating and following a budget. This will require you to make realistic projections about the growth you expect to see in 2021.
Not sure where to begin with drafting your 2021 budget? At Floro Business Strategies, we want to help you generate more revenue and meet your financial goals this year. Our professionals will guide you in setting goals, developing an actionable strategy, adopting performance metrics, and more — so you can stay on track this year!