Preparing annual budget

1. Annual budget: Stay focused, stay successful!
It is critical for every business owner to plan annually for consistent, healthy growth!
Before you jump in you need to do some preparation, review your financials, analyze your
strengths & weaknesses, and then brainstorm on what you might want to accomplish in the
coming year. Give yourself a little time to think about this and prepare yourself mentally for
the task at hand.
Your budget will need to include the following:
Projected expenses: The amount of money you expect to spend in the coming fiscal year.
Projected income: The amount of money you expect to take in for the coming fiscal year,
broken down by sources.
The interaction of expenses and income: What gets funded from which sources?
Adjustments to reflect reality as the year goes on: Your budget will likely begin with
estimates, and as the year progresses, those estimates need to be adjusted to be as accurate
as possible to keep track of what's really happening.
Just before beginning of the financial year firms look at making changes for growth in their
businesses, top of all setting and keeping financial goals – between investing, increasing
revenue and reducing costs.
Investing:
Before spending a dime, consider these important questions.
• What is the likelihood of the return?
• What about your timing-will this investment start paying back soon enough?
• How much cash is required?
For every dollar you don't invest wisely, you lose many more hard dollars. Hence it is must
to ask yourself a few questions before any investment decision:
• If a $10,000 software application would save you $20,000 over the next year, would
you buy it? Remember: If you don't spend the $10,000, you lose $20,000.
• What if you could lease another truck, hire an employee for $4,500 a month and add
$5,000 to your monthly net. If the market was there and other expenses held, that's
an 11 percent yield every month. What will you do?

2. Increasing revenue:
1. Add Complementary Services to Existing Products
Adding complementary services or products may help you gain new clients, as well
as maintain existing ones. For example, a lawn-mowing or landscaping company
might add swimming pool maintenance for little additional cost.
2. Add, Reduce, or Eliminate Shipping and Handling Charges
In lieu of raising the price of a product, consider adding a shipping and handling
charge. The net effect on revenues is the same while avoiding buyer backlash to a
price increase.
3. Participate in Coupon Programs
Distributed through newspapers and magazines, coupons have long been an
effective way to publicize products and increase sales. The Internet introduced
electronic coupons and reduced the cost of distribution even further
4. Incentivize Your Sales Partners
Revise your commission structure to “shake up” the sales force. Most commission
schedules are tiered where the salesperson receives a lower commission rate as his
sales increase. If you’re using that approach, flip the incentive ratio from top to
bottom by making the higher commissions applicable to the greater volume of sales.
Reducing costs:
1. Check out VoIP. – Start using VoIP services, even if you are having offline business,
still try to use VOIP based phones which are much cheaper in long run. Some of the
Voice options are Skype, Google Voice and Yahoo voice
2. Purchase recycled printer cartridges Cost of Printer cartridges can add really
fast, so if you are heavy user, buy a laser printer. Also while printing, use the low
quality 75 DPI and low quality settings to save ink.
3. Go Paperless - Paper and ink cartridges costs a lot of money and adds up fat, and
the more you use printers, the more rapidly they will wear out and need
replacement. Hence reduce paper usage.
4. Use technology to avoid travel- Many companies like Cisco offers virtualization
products and platform like webex which you can use for remote meetings
and conferencing to save money and time.
5. Share resources with other SMB - Find other businesses and try to share
temporary human resources and or physical resources.
Cost, revenue and profit are the three most important factors in determining the success of
your business. A business can have high revenue, but if the costs are higher, it will show no
profit and is destined to go out of business when available capital runs out. Managing costs
and revenue to maximize profit is key for any entrepreneur.