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  • Writer's pictureEH Lim

What's your budget?

Happy new year!

We wish you all have a great 2022.

After being disrupted by the COVID pandemic for two years, it's time to regroup and plan for your next move.

The world ahead of 2022 could be bright and sunny.

It is a recovery phase for many businesses.

But, are you ready?

Will your customer come back after this pandemic?

Will the operational costs increase?

Do you need to cut back on expenses?

Or increase the marketing spending?

Any change in the product line?

Do your customer still need your product?

Or is it better to switch business models?

The pandemic has changed how a business operates.

Consumer buying behaviour has changed.

Goods may no longer supply the way they used to be.

Being a small business, you may have to change to meet the changes.

Do you have sufficient financial muscle to change?

What should be a realistic projected sales revenue?

What is the new operational cost?

You need a budget.

The business costs changed when the business environment changed. The cost changes can be range from distribution, marketing, direct cost, finance cost, etc. With an appropriate cost allocation (fixed and variable) and desired margin to achieve, you derive a realistic sales revenue and input the budget into the accounting system.

Create a budget

MoneyWorks budgeting tool (under the Show menu) is a form-baed, provides a list of accounts (both Balance Sheet and Profit & Loss account) and the sub-ledger if you have switched on the departmental accounting.

MoneyWorks Budget
MoneyWorks Budget

Enter the budget figure into the cell and select filling down, duplicate the data or distribute the value across the months.

You may "alter" the budget from time to time to reflect a more realistic goal or create a new budget (Budget B) if the actual has deviated too much from the ideal. Then, monitor your progress with the Budget Profit report, comparing the budget against the actual performance.

MoneyWorks Profit Budget Report
MoneyWorks Profit Budget Report

We don't plan to fail but often fail to plan

Small businesses are usually more concerned about cash flow and day-to-day operation, but having a budget is extremely important when moving towards a new normal. With limited resources, it is more crucial to monitor the performance in an uncertain market.

Budgeting is like a compass, helping the business navigate, achieve the revenue and costs as planned.

Good luck!

Stay safe and healthy.

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