Most successful businesses need to have strong budgeting, planning and forecasting practices in place to be in control of sustaining and growing the business. Failure to get a handle of the financial aspect of the business will eventually lead to the failure of the business itself.
Here we look at the some of the key strategies which most good Chartered Accountants in Dubai will tell you:
Have a “Realistic” budget: Most businesses start off with a certain operating budget and investment in mind which is a good start but in reality we learn that the budget businesses start off and the operating costs can be completely different. Make sure your business budgets are reflected to accurate expenditure and costs required to run the business. Flexibility to adapt to market needs is very crucial.
“De-complicate” your Budget: Although it is essential to capture detailed data for your budget it does not always mean accuracy. Keep your budgeting processes simple. Sometimes too much detail can create unnecessary financial stress with information overload and complexity. The key is to eliminate errors, provide realistic information and reflect the health of the business.
Measure Budget on “Performance”: Reality is budgeting alone does not guarantee the desired outcomes for any business initiative so one of the best ways is for businesses to align a tangible performance based structure which links specific tasks and activities on measurable metrics. These can then have financials values placed on them to evaluate if it was profitable or not.
Have “Regular” Budget Schedule: any businesses again follow the standard budgeting cycles which have been in the industry – quarterly, bi-annually or yearly cycles. Be pro-active and radical and review your budget cycles to shorter sans especially if you are a new business- even monthly is not overdoing if you have a high transactional business. This will help you track and forecast better.
Factor in the “Variables”: We all know things never go to plan and not expecting the unexpected is being naïve as a business owner. Always be prepared for stagnant growth, delayed payments and slow turnover especially in an unstable and volatile marketplace. If your budget allows for such variables your business is better prepared to weather the tough times than to experience shock and have to make drastic changes in your operating processes, resource management or marketing.
Shouldn’t you be focussing on the core services of your business offering rather than have to worry about guessing what the best practices of budgeting are? Its simple – get expert and professional advice.