Once you have a business plan, move on to setting targets for the short and medium term. Do this together with your team, making sure everyone understands them and how they will be achieved. Then make sure everyone agrees that they are achievable. If your team isn’t willing to agree on this, go back to the drawing board.
Next, it’s time to draft financial forecasts for the same periods. There’s a temptation to do these just to satisfy some outside party such as a lender, but they are a key management tool. Highlighting deviations from forecasted numbers allows you to take corrective action more quickly. Your forecasts are dependent on assumptions and estimates, so here it is important to be conservative.
The last step in the process is to put together your near-term budgets. This is where team input is critical. Build budgets from the ground up, i.e. “here are our objectives, how much do you think we need to budget to achieve them?” rather than “here’s your budget!”
Developing targets, forecasts and budgets can be daunting tasks if you do not do them regularly. As accountants, these are our “bread and butter” and we would be pleased to assist you. If you would like assistance with with setting targets, forecasts and budgets please call us on 01865 582064 or contact us here.