Budgeting and forecasting are two mutually dependent and interconnected financial functions that allow a business to plan accurately for the upcoming fiscal year. These two terms are often used interchangeably and lead to ambiguity. As the CEO, your company relies on your vision and ambition to navigate through the corporate world. Follow these keys offered by an Edmonton accounting firm to better budgeting and forecasting for CEOs:
1) Have a Clear Goal in Mind
Successful CEOs possess that vision which propels them to draft the budget and forecast accurately for the future. Forecasting is all about analyzing the current landscape and making predictions about the future trajectory of your business. As such, it is important to have a clearly-defined goal in mind as to where you want to reach at the end of the fiscal year. Knowing where you want to reach makes the planning easier. For example, if you seek a 10% growth at the end of the financial year, you must start with that goal and reverse-engineer your way to develop the budget needed to meet that forecast.
2) Make Budgeting and Forecasting a Group Effort
Involving your entire team in forecasting and drafting the corresponding budget creates room for sharing of innovative ideas from the different departments. Each department is aware of its requirements and progress, and can provide the necessary insights in creating the forecast. Your team will get a rough idea of their needs and the efforts that they need to put in. As the CEO, you will get a clearer picture of where your company is currently standing and what scope it has for economic growth.
3) Keep your Budget and Forecasts Flexible
Forecasts and budgets are only estimates to determine the extent of your financial growth in that particular year. You must not rely completely on these approximations. Furthermore, the market is continuously changing. It is important to modify your business plans according to the latest trends in the market. A rolling forecast allows you to adapt to any new changes and improves the accuracy of your predictions. This can lead to better results in your business.
4) Use the best Software Tools
Most CEO’s fail to use the right kind of tools to get the job done. Incorporate the latest technology and software tools when completing the budget and forecasting process. Even small enterprises have benefited from integrating tech software into their planning process. Ensure that your company is up to date with the evolving cloud-based systems that make the arduous process much easier.
5) Make Tradeoffs at the Right Time
Sometimes, you may encounter situations which require you to invest in programs out of your budget. You might wish if you had included it in your plan earlier. This is the time to make smart tradeoffs. It may be tempting to overspend, but you must stick to your budget. If that program or service is really important, then you may opt for it whilst simultaneously compromising on your budget, i.e., remove some expense from your budget to finance the new product. Keep in mind that you have limited resources.
6) Be Comprehensive and Willing to Take Risks
It is important to pay attention to the details while forecasting and making your budget. If you miss out on any business plans, then you will not be able to meet the desired targets. Your entire forecast and associated budget could be way off by the end of the year.
One of the key traits of successful people is their willingness to take risks. Unless you experiment, you will not learn. You may flounder in the beginning, but all the struggle you take will put you in good stead in the long run. Hence, don’t be afraid to compromise.
Do you find yourself engulfed in the never-ending loop of budgeting and forecasting? Professionals accountants of Roth Schroder can help you. We are an Edmonton accounting firm offering a variety of accounting services at an affordable price.