6 Budgeting and Financing Tips for Organizations
How are you ensuring that your business has enough money to survive and grow? Furthermore, how do you know that you are spending your organization’s money in the best way possible?
These are critical concerns that every organization faces. To be able to effectively answer these questions, you must have a firm grip on your company’s budget and finances. Below, we share our six best practices to help you allocate your organization’s money effectively.
1. Have a clear understanding of your firm’s financial situation
First, you must have a strong understanding of the current financial landscape of your organization. You need to know how much money is coming in and going out regularly. Be sure you take the time to:
- Create a list of all your company’s income sources, as well as expenses.
- Ensure you are considering business taxes.
- Consider what initiatives are coming up in the next 6-12 months.
- Have a strong understanding of the different risks that may affect your industry.
2. Use financial forecasting
Next, you’ll need to predict how much money your organization will make and spend in the future so that you can plan accordingly. There are several different methods that you can use to forecast your firm’s finances. Here are a few tips we recommend considering:
- Focus on the 80/20 rule: Make sure to spend time considering your big sellers – 80% of your business is from 20% of your transactions – focus on the big stuff!
- Review and reassess: Continually review and reassess your numbers throughout the process.
- Consider key strategic initiatives: Make sure these are captured in your plans.
- Start with the sales budget: Your sales budget will feed into all other aspects of the financial plan. Focus on your expected sales, by key products and customers to determine if you have the resources to meet those targets
3. Create a realistic budget
This isn’t the time to try to cut costs too deeply or inflate predicted sales. Instead, look at your past financials and current business environment and utilize your financial forecasting to create a realistic budget that will allow you to save money and still maintain a high level of quality in your products or services.
4. Make sure that you are monitoring your budget closely
Once you have created a budget, it is important to monitor it closely. This means keeping track of your income and expenses so that you can adjust as needed. If you find that your firm’s financial situation has changed, or if you need to adjust your budget, be sure to do so promptly.
5. Engage leadership and management teams
Collaboration is key to any successful business endeavor and budgeting is no different. Take the time to involve leadership and management teams in the creation, review, and approval of your budget. Additionally, you should also keep them updated on your progress so that they can provide input and make changes as needed.
6. Seek professional help when necessary
Finally, seek professional help when necessary. If you are having difficulty creating a budget or monitoring your finances, there are several financial professionals who can help you. These financial experts can provide you with the guidance and advice that you need to ensure your goals are achieved.
Our team at Part Time CFO has years of experience working alongside organizations across a variety of industries. We understand how to help you overcome your biggest financial concerns and can help you create the most effective decision-making strategies possible. Let us help you with your financial planning needs so you can direct your energy into developing and growing your organization.