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What is the
Best Financial Tool for
Business Owners?
 If
there were a tool that helped you create crystal-clear
plans . . . that provided you with continual feedback
on how well your plan was working . . . that told you exactly
what's working and what isn't, allowing you to
consistently make smart business decisions to keep your
business on track for success - wouldn't you want to take
advantage of it?
Well, there is such a tool. It's called the Budget vs.
Actual report.
Clarifying
Your Plan
Clarity is power. The clearer you are with your business
goals, the more likely you are to achieve them.
Creating a budget forces you to drill down in to the details
of your goals. It prods you to think about how one business
decision affects all other aspects of the company's
operations.
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Example: Say you want to grow your sales by 15% this
year. Does that mean you need to hire another
salesperson? When will the business start to see
new sales from this person? Do you need to set up
an office for them? New phone line? Buy them
a computer? Do you need to do more advertising?
How much more will you spend? When will you see
the return on your advertising expenditure? |
You see, a budget is really a
planning tool that makes you clarify your dreams. And planning
is the first step in making your dreams real.
Navigating
the Ship
Once you've clarified your
goals, you start making business decisions to help you reach
your desired outcome. Some of those decisions will be great
and give you better than expected results. And some decisions
will give you poor results.
This is where the Budget vs
Actual shines.
When you compare your budgeted
sales and expenses to your actual results, you see exactly
how far you are off your plan. Sometimes you need to
adjust your plan (budget) and sometimes you need to focus more
attention to the areas of your business that are not
performing as well as you planned.
Either way, you are gleaning
valuable insights into your business.
It's like sailing a boat. You
are off-course most of the time - but having a clear goal and
making many adjustments helps you reach your destination.
Just Do It
Nike knows the power of the
phrase "Just Do It." We often know what we need to do but
don't take the necessary action.
It may seem like a huge hassle
to create a budget and then create a Budget vs. Actual
report every month. But as with any new skill, although
it's hard at first, it does get easier.
Let us help you. We can
guide you through the budgeting process. We can ask you
questions that help you gain clarity.
You'll feel energized after it's
done. You may even have fun.
So "just do it." Give us a call
and we'll help you turn your dreams into reality.
If you have any questions about
budgeting or getting started creating an Actual vs. Budget
report, please give us a call at 301-657-8080.
To read more articles on our web
site
click here or go to
www.eSullivan.net and click on the Newsletter section.
 As always you can call our offices if you have any
questions about these or any other accounting related issues, at 301-657-8080.
Regards, Paul Sullivan, CPA
President, Sullivan & Company |
