Strengthen your business with a solid plan and budget for FY23. Take action today
How many times have you hit ‘snooze’ on your task reminder to finalise your FY23 budget? We get it. Whether you’ve ignored it 5 or 50 times, it’s hard to look ahead when you’re in the trenches wrapping up FY22 and deep in business-as-usual each week. Yet, if you don’t set aside time to establish a solid FY23 budget plan, you are weakening your potential for success. A budget is essential for growing your business. As Katherine Paterson says, “a dream without a plan is just a wish.”
At Dexterous, we want to empower your business to grow. And we have the team of growth-focused professionals to help you achieve your full potential. Here, we’ve collated our team’s best-practice advice to help you set a new financial year budget that’ll strengthen your business.
Get started: How to establish your FY23 budget plan
First-up – the goal for your new financial year budget is about progress. Not perfection. Take the time to imagine what you want the future of your business to be. Where are you now? What is your team’s potential? What are the key steps between where you are now, and what your future state looks like? Then, concentrate on the key drivers that will get you there.
Consider this list below. Are any of these drivers relevant for you to budget and plan for?
- revenue growth,
- subscriber numbers,
- number of partnerships,
- signed contracts,
- number of orders,
- average sale price,
- number of products/services/ranges/SKUs
- increase franchisees/locations/branches/outlets
- additional channels
- website traffic and/or conversion
Now, think through the costs of delivering these drivers:
- What are the resources required to grow each driver?
- What resources do you need to execute the orders?
- What cash flow do you need at what time throughout the year?
- Are the growth rates realistic? Are they a stretch goal which will motivate the team?
- What risk mitigation strategies do you have in place?
- What wage growth rates have you factored in?
- What material/supplier/operating cost increases have you included?
- Can you lock any costs in?
- Do you need to consider capital purchases to achieve this growth?
- Do you need external expertise to fast-track learnings for growth in the business?
- Do you want to look at taking on additional debt or an equity injection to achieve this growth?
Taking the time to answer these questions will take you a good way along the process to create your budget.
Of course, there are many other considerations, models and methodologies to budgeting and forecasting beyond the ideas we have included above. We recommend starting with establishing a few practical and advantageous habits that will deliver. It’s also important to have your CFO and finance team work with you on the business’ budget plan. Finance professionals have the right expertise to assist you with forecasting, risk mitigation and growth opportunities.
Get ahead: 4 tips to start on your FY24 goals now
If you’re really looking for an advantage for your business, start taking steps toward FY24 now. That’s right. You can be working towards goals more than 12 months ahead. Your future success will thank you for it!
Here are four great habits we recommend you consider:
Tip 1: Use your calendar to work for you
Once you have finalised your FY23 budget, put goal-related activities in your calendar. Schedule time into your diary now to reflect on your progress against your budget. Be sure to make note of any considerations you missed when setting your original budget. Then, use these learnings when it’s time to set your FY24 budget.
Tip 2: Consider keeping a rolling 12-month forecast
As you complete each month, check your progress. Then, roll forward to the next month with any additional considerations or changes factored in. When you keep a budget like this, you can simply review your FY24 budget at the end of financial year. No need to start from scratch every July.
Tip 3: Track your monthly management reports
Ask your finance team to track budget versus actual in your management reports. This includes documenting reasons for the variances. It acts as your go-to reference guide for next year. You will quickly be able to gain valuable insight on where overspend and underspend occurred, and adjust your future budget as required.
Tip 4: Nominate an overhead account to review and drill into each month
Every month, select one general ledger account to review in detail. For example, review your annual spend on legal fees in July. In August, look at your annual spend on interest and borrowing costs. Review your subscriptions in September. And so forth. Ask yourself questions like:
- Are you getting the best deal?
- Are you using every subscription that you are paying for?
- Do you need certain levels of access/users?
- Could you arrange a retainer or discount from your providers?
- Can you restructure your financing to reduce your interest rate from your bank or lender?
Every small win can make a big difference over the year to your bottom line.
“Dreams Don’t Work unless you do”John C. Maxwell
Don’t press snooze on your budget calendar reminder today – go through these suggestions or give us a call to help you take action!
At Dexterous, we are growth-focused like you. We are your internal finance department that collaborates closely to help your business achieve its short and long-term goals. Be powered by Dexterous today and supercharge your business’ growth trajectory. Call 1300 996 928 or schedule a complimentary, obligation-free consult.