Business and budget planning: an entrepreneur's guide
When running a business, good planning and strict management
are required to achieve a good financial result. To achieve this, the solution is to set up a process budgeting. There are many advantages to business planning and budgeting. This guide outlines the key points and implementation procedures. You'll also find guidelines for optimizing your company's financial management and ensuring that your business plans are realized.
Establish a company growth plan
When a company is starting up, its managers tend to lose sight of overall development goals at the expense of day-to-day management concerns. However, it's important to remember that successful companies give from the importance of planning and financial managementand theestablishment and revision of their business plans. Monitoring the budget and performance must also be regular.
Devoting time for business planning is essential to a company's success. In particular, it enables us to identify growth sectors, carry out a competitive analysis, and take stock of the company's financial situation. Companies generally perform these tasks without formalizing them. However, integrating them into a cohesive process is neither time-consuming nor complicated. The key, however, is to draw up the plan and involve all the relevant staff in it.
The business plan and its benefits
The main advantage of planning your company's management and budget is to make it easier to manage. In fact, it enables you to identify objectives to achieve for the company's growth. Business planning is an opportunity to take stock, analyze performance and identify the factors that can influence your company.
Drawing up a business plan allows you to :
- Facilitate the regular identification and implementation of necessary improvements.
- Prevent potential problems.
- Gain the mental clarity to identify exactly what you want to achieve.
- Better focus on what needs to be done to achieve objectives.
- Decide with confidence.
The business plan for the year: what to include
Visit annual business planning key objective is to define the strategy and the actions required to ensure the company's success. It should help clarify the current budgetary situation and plan for next year.
Visit annual business plan must present :
- Any changes you are planning within your company.
- Market, prospect and competitor adjustments.
- Results to be achieved for the year.
- Key performance indicators.
- Any operational changes.
- Administrative data and company headcount.
- Results, performance and budget outlook.
- The composition of investments.
However, the continuity is essential to the effectiveness of your business plan. You'll be able to carry out the necessary actions without delay, and evenanticipate events. This is much better than reacting to it to limit its effects.
What are the steps involved in business planning?
1. Analysis of current results and comparison with forecasts for last year and the current year.
2. Identification of areas for improvement, opportunities and risks.
3. Identification of objectives achieved and chess from last year.
4. Review of objectives for next year: improvement or extension of the plan.
5. Identification and detailed analysis of resources, and definition of budget strategy.
6. Set targets based on gains, losses and financial results.
7. Plan conclusion.
8. Regular review of the plan, at least monthly, to monitor profitability indicators and progress against pre-defined targets.
9. Repeat the first planning step.
Budgeting and business planning
When starting up a new business, entrepreneurs are generally unaware of the need to define a budget and adopt a flexible management approach. However, financing your business plan is essential to guarantee success. Your treasury requires strict management and planning. You need to define your budget in advance, so that you can seize any investment opportunities that may arise. The right time to invest must also be defined in advance in your business plan.
During a period of growth, you may not have the means to develop all these sectors. In general, you'll need to divide your budget between several activities, such as sales, marketing and sales support. marketingYou'll need to channel your financial resources in different directions. To keep control of your budget, it's essential to plan ahead.
Visit your budget plan allows you to :
- Monitor your expenses and cash flow.
- Check your financial capacity in relation to your current commitments.
- Make the most appropriate budgetary decisions to achieve your goals.
- Know what funds you have available for future projects.
The budget defines the company's expenses and how they are to be financed. It is therefore an objective defined in advance by the business plan. It is therefore distinct from the budget forecast, which is a prediction of the company's financial results.
The benefits of a budget plan for the company
Establishing the corporate budget allows you to benefit from a number of advantages, including :
- More efficient management of company finances.
- Identifying the right resources for each project.
- Keep an eye on yield.
- Monitor progress towards your goals.
- Decide more efficiently.
- Anticipate potential problems, including those concerning company financing or cash flow.
- Preparing the company's future.
- Motivate employees.
Drawing up a budget plan
Successful business requires plan, control and govern the budget. This facilitates the correct allocation of resources for the company's profitability and performance. These tasks are based solely on the calculation of projected profits and expenses required for the current financial year.
The first step is to ask yourself the right questions:
- What is the projected sales for the financial year? It's important to be realistic, however, as overestimation can lead to future difficulties.
- What are the direct expenses of production? This includes the purchase of materials, the services of subcontractors for manufacturing or related services.
- What are the fixed expenses or the overhead costs ?
It is necessary to categorize fixed expenses and overhead costs :
- Premises: rent, municipal taxes, service charges...
- Personnel: salaries, Quebec Parental Insurance Plan (QPIP) premiums, benefits, QPP (Régie des rentes du Québec) contributions, CNT (Commission des normes du travail) shares...
- Services: telephone, internetlighting, heating...
- Stationery, postage and printing costs.
- Vehicles: rental, fuel, insurance, maintenance, parking, etc.
- Machine and tool costs.
- Marketing and advertising.
- Travel bonuses
- Legal coverage, professional liability, insurance.
Visit your company's expenses can be of various types. As a result, the budget may need to be split between several parts of the business. This also includes your compensation or share, as well as thetax. The business plan is useful for determining projected sales, production expenses, fixed costs and overheads. It is therefore advisable to draw it up as a priority.
To determine earnings, you need to look at sales and expenses. By analyzing costs, you can identify possible reductions. This makes it possible to anticipate potential cash flow imbalances and take appropriate action.
Once you've planned a budget, it's essential to stick to it. However, it's important to you can review and modify it if necessary. Successful companies apply a rolling budget and establish it periodically. For example, for a one-year period.
Drafting a budgeting document: the main steps
To ensure that a budget is realistic and applicable, there are certain steps to follow when drawing it up:
- Make the most of your time drafting the budget: to facilitate management and ensure efficiency, the budget must accurately reflect reality.
- Use the previous year's results Your sales and expense history will enable you to forecast future sales and their costs. Budgeting should also take into account your sales plans, the allocation of your sales resources and the competitive environment.
- Establish a budget plan realistic Your budget for overheads and fixed expenses must take into account your financial history, your business plan and any operational changes. Plan your variable costs in line with your sales forecasts. It is therefore advisable to analyze the correlation between variable costs and sales. Include as much information as possible in your budget plan. This will enable you to monitor the factors that influence performance, including sales, profitability and profitability. working capital and expenses. Don't hesitate to use accounting software to make your job easier.
- Include skilled employees Your accounting and finance department can provide you with budget statistics: sales targets, manufacturing costs, indicators for a specific project. By comparing these figures with your own, you'll get a budget that's more in line with reality. By involving these people, they will be more committed to sticking to the budget.
Items covered by the budget
You'll need to define how many budget plans you'll actually need. For small businesses, it's usual to draw up a single overall budget whose role is to define the operating cost for the coming year. However, as the organization grows, the final operating budget is made up of various specific budgets, such as marketing or sales.
Visit items to include in your budget :
- Visit projected cash flow This budget reflects your cash flow for each month. This is essential for small businesses to identify possible difficulties. This cash flow budget requires at least one monthly check.
- Visit costs Cost forecasting can be facilitated by analyzing the previous year's files. This will also help you make proposals to your suppliers. Three types of costs are normally found within a company: - Fixed costs: e.g. rent, financing costs, salaries... - Variable costs: bonuses, overtime, raw material prices... - Costs of production: e.g. production costs, labour costs... - Costs of production: e.g. production costs... isolated costs due to the immobilization of funds Purchasing production machinery and equipment, fitting out premises...
- Visit sales Sales forecasting is based on historical data and the actions you have taken to improve performance. Sales and expenses forecasts enable you to estimate profits for the coming year. This will give you an estimate of your margins and other key indicators, such as return on working capital.
The budget: a basis for calculating yield
By establishing your budget in relation to your budget planning, you'll have a financial action plan. This guarantees many benefits, especially if you review your budget periodically during the year.
That's right, the budget is usable for :
- Indicate the costs and sales of each of your activities.
- Gather data that will enable you to facilitate your decision-making.
- Monitor and control your business, especially if you compare your current income with your sales.
Comparative yield study
Visit comparing each year's budgetYou'll be able to benchmark your company's performance. To do this, projected data can be compared with previous years to identify your performance. Your company's margins and projected performance can also be compared with those of other companies in your industry or the various activities of your organization.
Performance markers
To improve your company's performance, you'll need to identify and control the factors that can influence your activities. In particular, identify the triggers that have an impact on your business. impact on your company. Many factors can affect a company's performance. That's why it's essential to limit yourself to just a few of these factors, so that you can monitor them more effectively. However, the number of indicators that can be monitored depends on the resources you allocate to them.
Visit three key indicators are usually :
- Visit sales
- Visit expenses
- Visit working capital
Combined with budgets and forecasts, these three factors figures help identify any potential problems related to the treasury or the lower yields. However, it's their consistency that enables problems to be detected more quickly.
Periodic budget control
Establishing the A budget plan is essential for the proper management and development of your business.. Moreover, it may become necessary to draw up several budgetsWhen the company's components multiply and grow. However, if budgets are to be used to best effect, they must be reviewed frequently, and modified if necessary. This process is especially necessary for companies in the midst of growthbut is also essential when you consider a expansion your business. Indeed, examining and revising the budget is an essential step when you want to launch new activities in a new sector.
By regularly reviewing your company's budgets, you can ensure that they are up to date. This offers a number of advantages, including the ability to more flexibility. This will give you greater freedom in managing your cash flow. What's more, you'll also find it easier to identify or define the next objectives you want to achieve for the next financial year.
During theperiodic budget reviewThere are two main points to bear in mind: Your income or sales real. This should be compared month by month with your company's sales budget.
To do this :
- Analyze the causes of each loss or shortfall. This includes, for example, declining sales volumes, stagnating markets, lack of product performance...
- Analyze the causes of any particular sales decline. This may be due to over-targeting of prospects.
- Compare the date defined for calculating income with the date of your projections, and check for correspondence. By studying these discrepancies, you'll be able to draw up your future budgets more realistically. This is also necessary so that you can take appropriate action if necessary.
Real costs
Regularly review actual costs and expenses in the light of your budget. This will help you forecast future costs with greater precision.
To do this, you will :
- Understanding visit causes of deviation between your fixed costs and your budgets.
- Make sure your variable costs were conform budget. Variable costs should normally be proportional to sales.
- Study the causes of variation between costs and revenues.
- Identify causes of budget variances in relation to the expenditure calculation dates. This may be due to your service providers' payment terms, for example.
SADC Achigan-Montcalm: Who are we?
To help you manage your business efficiently and exploit its full potential, the SADC offers you :
- an array of management consulting
- solutions corporate financing
- and a support for collective projects.
How to find us
As a regional player, we serve companies belonging to one of the following communities from 10 municipalities of the Montcalm MRC as well as municipalities belonging to the L'Assomption RCM (municipalities of L'Assomption, L'Épiphanie and Saint-Sulpice). We also operate for municipalities in the Rivière du Nord RCMSainte-Sophie and Saint-Hippolyte.
In other words, we serve the municipalities of Saint-Hippolyte, Saint-Calixte, Sainte Sophie, Saint-Lin-Laurentides, Saint-Julienne, Saint-Esprit, Saint-Roch-Ouest, Saint-Roch-de-l'Achigan, Saint-Liguori, Saint-Alexis, Saint-Jacques, Sainte Marie-Salomé, L'Epiphanie, L'Assomption and Saint-Sulpice. However, the municipalities of Repentigny and Charlemagne are not eligible for our financial assistance. Our offices are located at 104, rue St-Jacques in Saint-Jacques.
We believed in their project and they put their trust in us.
Since our creation in 1992, we have assisted numerous entrepreneurs in their objectives of transferring their business to a new owner, or in the creation of a new company. start or company growth. These include :
Solnor EnvironnementSolnor Environnement is an expert consultant for contaminated land and geology. Solnor Environnement's core business is the management of projects with a geological component, the analysis and study of soil and water, their decontamination and the environmental analysis of sites.
Lait de poule inc. the maternity and nursing specialist in l'Assomption, offering clothing and textiles for pregnant women and textiles to facilitate breastfeeding.
Brasserie L'Apothicaire of St-Jacques de Montcalm, whose mission is to support an ecosystem of regional microbreweries, and to help and contribute to the emergence and development of local players offering products of excellence.
The integration company Job Access Buffet whose core mission is to provide a gateway to the job market in the catering sector.
While these players belong to a wide variety of economic sectors, the fact remains that our approach, which focuses on the local level and on serious, well-thought-out support tailored to their objectives, has contributed to these successes. success stories. Behind each of these entrepreneurs was a ambitious project, and we are proud to present their success..
SADC can help you develop your business. Call on our team to bring your entrepreneurial projects to fruition.
