Setting Goals and Budgeting to Meet Them – By Jeffrey D. Bronswick, CPA, MBA
Do you have your 2013 goals and budgets set yet? Many companies do but others have found that the day to day activities of running and working in their businesses have gotten in their way. It’s not too late. So whether you haven’t done this already or you need to do some fine tuning, here are a few tips that will keep you on the right path.
What you should take away from this blog is:
1. Set goals
2. Have a budget
3. Hold your employees accountable
4. Be profit-driven!
What you need to do to get there:
Accounting information and controls
Without good information, you cannot make good decisions. Make sure your accounting is accurate, timely and enables you to drill down for details when necessary. You will have a better understanding of the financials side of your business so you have less surprises and more control. Also, you need good financial controls and processes in order to minimize mistakes, avoid being taken advantage of, and to maximize profits.
Sales goals should be consistent with the type of sales in your overall marketing/business strategy. The goals should be specific: be able to identify who, what, when, where and how. Hold your sales staff accountable. Don’t let them tell you how much they can sell. You need to tell them. You/management sets pricing and terms. Any price concessions must require your/management approval. Monitor sales people frequently. And, of course, reward those that meet or exceed the goals you set.
Negotiate costs and terms with vendors. Set goals for operational efficiencies. Reward those in charge of costs for lowering costs while maintaining/increasing quality of your product or service.
Selling, general and administrative expenses
What does the company really need to drive a successful business? Hold your employees accountable for the performance of the business, control of costs and productivity. Set goals for them and train/mentor them.
A business is formed to earn profit and increase the wealth of its owners. If a company isn’t profitable, it will ultimately fail. So management should be rewarded based on bottom line results and not on sales or gross margins. If the company doesn’t make a reasonable profit then management hasn’t earned an extra reward.
ROI to investors (you /your partners/stockholders/investors)
Ask yourself, why should someone buy or invest in this business? Make your business into something that a buyer or investor would covet. If you can do that, you are on the path to either make a lot of money with your business or sell your business for a large return. You win either way. However, this is where longer range plans (beyond one year) are needed.
Until next time.
Jeffrey Bronswick, CPA, MBA
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