It’s now November. Have you completed your 2014 financial plan or budget yet? If not, do it now, before year end crunch time. An old quote says that “planning without action is futile, action without planning is fatal”. By carefully establishing best estimate revenue and expense projections now, you’ll get a glimpse into the future, good or bad, based on these assumptions. That one year plan is also the foundation for longer range financial goals over three to five years.
This plan typically starts with an unimpeded “run rate” based on a continuation of today’s activities. These first pass results are normally not acceptable, unless your company is enjoying great 2013 partial year growth and profitability that you will fully realize next year. Next, your subsidiary plans for capital expenditures, marketing and advertising, HR, sales, technology, and other new initiatives need costing and timing inclusion in order to understand the impact on 2014 results. It can take several iterations before an acceptable plan is finalized.
Whether complex or simple, you need this financial barometer to measure your actual results against. It gives you both an early warning and real time indication as to whether you’re on course with your desired goals. Want some help? Western Equity LLC’s Consulting Services can help you draft a planning framework that meets your requirements.