Time for Planning and Budgeting
Have you already planned the (financial) year? If you haven’t it’s time to get started.
The budget is an essential part of your plan. The basics are quite clear: what’s the expected income, and what are the estimated expenses.
First and foremost: be conservative, or at least don’t be overly optimistic. Planning & Budgeting is not a guessing exercise and definitely not one in which grand plans are sketched.
FUTURE INCOME... at minimum this should be based on:
- The past periods’ revenue
- Customer attrition and customer acquisition rates
Another factor you should look into is your company’s growth trend. Growth can come from higher revenue from existing accounts and new clients. Spend some time analysing these trends. Are they to continue? Which services are experiencing higher growth?
Tip: break down the revenue by service and by client to have a clearer picture.
You will also need to consider the trends in the security industry. Are you expecting growth in any particular service? Are there any external threats that could negatively impact your income?
Similarly you will need to gather information on costs and make a projection taking into account past periods’ records and known information (e.g. a known change in an award negatively affecting wages; an investment in new equipment).
The most significant cost for a service company is normally wages and payments to contractors. This area deserves all your attention if you are in a managerial position.
- Do you have a system to check employee and contractor performance?
- Are you implementing changes so underperformance is reduced in the next FY?
Questions? Please get in touch and we’ll come back to you very soon.