Budgeting and KPIs

In the ever changing landscape of a small business, a lot of owners are consumed with day-to-day tasks of running their business, and bombarded with information from every corner. There is simply not enough time in the day to sit down and properly think about why it is that you started your business in the first place, what your goals are and how to achieve these goals.

This is where budgeting and setting strategic objectives becomes important for the continued success of your business. Budgeting your future financial statements is a helpful and useful tool that your business can utilise to help anticipate future performance and help you make appropriate decisions. Budgets can be used for estimating the financial results, financial position and cash flows of your business as of various dates in the future.

Budgeting forces you to plan your fund-raising efforts and expenditure. A budget helps you to be realistic about what you can hope to achieve. It also helps you monitor progress and performance against strategic objectives developed to achieve continued success.

Regardless of what industry you’re operating in, it’s likely your organisation has a clear direction on what they want to achieve and has some established objectives. One way to monitor how well your business is doing to meet these strategic objectives is to develop a set of key performance indicators (KPIs). But ask any managing director, and they will tell you that it can be a difficult process developing a set of KPIs to truly track your objectives.

Talk to us if you require assistance with creating a budget for your business or developing a set of KPIs to monitor your objectives.

By Damir Turkanovic. Senior Accountant – Venture Private Advisory.

You might also want to read this Haven’t Budgeted for a Tax Bill? What to do Next?.