Planning for the New Financial Year starts now
– Let’s talk about
Budgets, a plan!
Single person budgets, Household budgets, Company budgets.
I like to call it a plan. In my 20’s I worked for a company
where I had to travel to do budgets, a plan for the New Financial Year. We
worked on those budgets for weeks, seeing where we could cut back, where we
needed to increase. We a looked at the previous financial year in comparison.
We adjusted for future expenses and future purchases. We looked at what made up
our sales, and where we planned to increase them. Would we have the budget to
open a new store?
Do you have a budget? A Plan?
I have a budget in my personal and business capacity, I used
to have a rough budget and everything else was in my head. (That was when I was
single and employed). Best advice is to write it down and best to have a budget
as an individual, a family, a company. It never too young to start a budget.
Now that I am a Single Mom with a growing business and
everything going up. Double electricity, no free water, a drought charge being
in place. ADT charging a radio charge once a year. The Gym charging a
maintenance charge once a year, my daughter needs to go to High School soon.
(Let me not tell you how expensive that is going to be) and my house needing
repair and maintenance. I have a Plan which I look at daily, weekly, monthly. I
am always seeing where I can cut back, and where I can buy that thing I need or
want. Where I can cut back to cover for those unexpected expenses. Can I afford
to go to the Accountants conference at the end of the year in Johannesburg? Can
I afford that new computer or can I afford that overseas holiday?
So I did my research, looking for more information to help
myself and help others. I love researching and I started a plan.
Referring to Mike Michalowicz’s book “Profit first” I looked
at my Income and Expense report – do you have one? I put in place, what is
profitable, what I can reduce and what I must cancel system.
I looked at what made up my Income. I am in the service
industry so I have different streams of Income at different times of the year.
I looked at what I expected to make this year. At was I getting rid of. I
looked at things that don’t work. At introducing new services. I also looked at
the Seasons and how I could increase my income in the quiet season.
(December/January is my quiet season) When is yours?
I looked at my Income and Expenses for the previous year. If
you are a company have a look at your financials (management accounts) for the
previous year. I looked at all the expenses that increase once a year, e.g.
Insurance, security, rent (if you are renting). Even bank charges and make the
allowance on the budget. I looked at once a year expenses, e.g. Motor Vehicle
Licences, TV Licences, school stationery. Add them to your budget.
Now, for the best part, I put a saving plan in place. Do you
have one? Referring to Mike Michalowiz’s book “Profit First’’, his Target
Allocation Percentages (TAPS). (I love the book). I have a saving plan where I
put away 5% for profit (R5 for every R100). 15% for Tax (R15 for every R100)
and out of my owner’s compensation (salary) I decided to put away 10%. Each
person’s Income is different. Their expenses are different and their debt is
different. So his advice is to start small. 1% for Profit, 1% for Tax etc and
increase it monthly until you reach the required percentage. It has been so
exciting to watch my money grow.
In conclusion, Income Plan + Expense Plan + Saving Plan =
Budget.
Need help with creating your budget. It doesn’t matter how
small or big, need to know where you are going with your business. Contact me,
Cherine@thebookkeepingcompany.co.za. I can help you create a plan, a budget.
