Running a business without a budget is like a ship’s captain setting off on a voyage without a map. Sounds ridiculous, doesn’t it. Yet this is, figuratively speaking, what many business owners do. Successful business owners not only set a budget and clear targets each year, they monitor them closely each month, even each week and adjust them as they go throughout the year.
Consolid8 uses our experience from the real world to set a business budget. We build a budget from the bottom up. We start by determining what profit you want to make. Then we review all business expenses, looking for opportunities to reduce or renegotiate costs. Your target revenue is calculated by adding desired profit and business expenses. We believe bottom line profit should drive top line revenue.
Step 1: Determine Net Profit
Decide how much profit you want to make in the next 12 months. Make sure you include a wage for the business owners or directors.
Step 3: Review Direct Expenses
These costs directly contribute to making or selling your product or service, like freight and wages. Sometimes savings can be found by switching providers.
Step 4: Target Revenue
To calculate your target revenue add desired profit to operating and direct expenses. The next step is to validate this target by building a revenue plan.
To quote Benjamin Franklin "If you fail to plan, you are planning to fail". A business meandering along without a budget doesn't have a clear road map with specified goal or target. The process of building a budget makes you think about revenue targets, your pricing strategy, team's capacity. It results in clear targets and KPIs against which you can measure your success. A budget holds you accountable to the business road map.
Strategy and Accountability
A budget holds you accountable to your business’ financial performance. Strategic decisions should be based on the numbers.
After reviewing your finances we help you set quantifiable targets and measure performance against your budget.
Small Changes, Big Impact
We show you how a 1% reduction in expenses and a 1% increase in price and volume add up to a big lift in revenue.