Forecast the Budget
Because no one knows what the future holds, forecasting is not an exact science. It’s a combination of knowing the markets, the company, and what can change to affect the sales and profit numbers.
The budget process has five major steps:
- Set profit goals for each month and for the year.
- Set revenue or sales goals. Convert profit goals into the revenues needed to generate profits.
- Forecast variable costs. Consider how forecast equals projections plus predictions.
- Forecast fixed expenses again.
- Forecast net profit.
A combination of projections and predictions equals a forecast. Projections should be based on past and present experiences and then modified when the goal is predicted. The prediction is merely the best of the educated guesses, which factor in research, future changes, real changes, competition, and market conditions.
- Create a budget to assure your 1 - 3 year goals.
- Print your budget.
- Develop future P/Ls vs budget and print them out monthly.
- Review your break even and your history to arrive at monthly and seasonal budgets by the month.
Budget forecasting can be a complex process and when not done right, can lead to costly mistakes. Contact Holt Marketing and Management Services for a customized budget forecast for your business today!