What numbers do you need to achieve to get what you want?
Start with what you want to have and then build from there. This is the high level budget.
Draw the zero-based budget up on the flipchart, starting at the bottom with the profit being targeted, then adding on the overheads or fixed costs in the business to establish Gross Profit, then writing down the GP %, then calculating the sales at that GP rate:
Sales $1,282,000
GP% 39%
Gross Profit $500,000
Overheads $350,000
Profit $150, 000
Of course you will need to develop this in more detail. You then need to break this down into monthly targets.
Our most successful clients do a month by month forecast every year. Hands up those of you in the room who do one. Fantastic. And how do you feel once that forecast is finished?
The response will usually be that they feel good, relieved, that they are in control of their cashflow.
In time you should be able to do this yourself, but of course we can help you if you want us to teach you how.
