Planning & Budgeting
A well-run business will have controls and procedures in place to monitor the business as well as providing means of gathering relevant information in order to monitor the business on its way to achieving its goals and objectives. Controls also provide an early warning that something maybe wrong.
Most people would associate such procedures and controls with very large organisations, however, planning, budgeting and forecasting are vital tools for SMEs as well.
Strategic Plans & Business Plans
Every business should have a strategic business plan which is vital to developing a long-term view of where business is going and how it plans to get there. When a business is considering raising finance, the plan for finance providers needs to include a significant amount additional information in order to provide new parties with a better understanding of the business. It usually contains information about the history of the business, the owners/managers and key personal, range of products and services as well as financial information (historical and projected).The purpose of the plan is to enable the business to sell itself to potential investors and finance providers.
Budgeting
Now, more than ever it is vital that all businesses prepare an annual budget to decide a plan for the business in the
following years. It is important that the budget is reviewed on a regular basis in order to measure progress and monitor as to whether the business is achieving its targets and if not, then why not.
If an SME does not have the resources in-house to prepare the information, accountants can help to devise a simplified system of planning, budgeting and forecasting which summarises key performance indicators and provides a feedback mechanism. After all, it is of no benefit to have set targets and budgets if they are not being reviewed regularly and actions agreed where significant variances arise.
Contact CACM Accountants for further information.