By Jeff Semple

If you want to grow and maintain a healthy business, you have to know where you’re going to generate revenue and incur costs.

That’s why developing a budget that is in alignment with the purpose and goals of the company is so critical — and such a challenge. You have to ensure that the information you use to author your budget is current, comprehensive and goal-oriented. It can be a lengthy process, but there are some pointers you can use to help ensure that your budget planning process is a fruitful one.

Start with the end in mind. Its can be hard to get to where you want to go but even harder when you don’t have a destination in mind. This will also give you a basis for making decision as you move forward in the budgeting process.Examine what has happened in the past. This includes looking at the historical financial performance, as well as the economic climate in which you are operating. Pull data from recent periods and utilize that as a starting point. Look at performance indicators to help you get a handle on whether your business is relying on the right metrics and observing the right industry trends.

Develop a budgeting model. Once you’ve established a destination and reviewed the historical information, you need to chart a course. As you develop your model, consider whether multiple budgets are required for multiple scenarios. Develop an outline for the process and budgeting guidelines that will allow everyone to adhere to the budget, track their progress, while executing on the goals.

Your budget should be a living document that gives you an accurate view of where you’ve been showing you the path to where you should go. Updating your budget consistently through the year will also allows you to make adjustments in future months that assure you arrive at your intended destination.

To learn more about building a better budgeting process, call us at (330) 412-5872.