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Budgeting for success!

The commercial elements of business are always a keen focus for company managers and owners.   We all check the sales figures on a regular basis but not everyone takes the time to develop a strong understanding of their cost base. 

It’s time to start budgeting for success!

Small Business Budgeting Benjamin Didier, Financial Controller @ ServiceMaster Torquay

Benjamin Didier, Financial Controller @ ServiceMaster Torquay

Many businesses use the idea of a ‘break-even’ sales level, an answer to the question:  How much revenue to do we need to generate in order to cover costs? In other words; what are the sales required to ‘break-even’?  Understanding the total cost and what makes up this figure is crucial to controlling company finances.  Knowing the break-even is useful but so is being able to plan ahead with predictable monthly costs. 

Fixed costs such as monthly salaries and quarterly rent are easy to predict as they are the same every month.  But how do you go about building up a picture of the more variable costs?  Direct product costs and wages that flex with customer demand can be difficult to predict and so they are often tied to the revenue as a proportion using the gross margin.

Budgeting

The most difficult costs to predict are the unexpected ones – over runs on projects, damage to equipment that needs replacement, vehicle breakdowns and other one off projects.  Seeking providers that offer fixed monthly fees can turn unpredictable costs such as a one off computer breakdown in to a fixed overhead for a predicable monthly payment. 

The advantage of a strong understanding of the monthly costs in your business is that you can budget more effectively for progression projects such as; marketing and sales activities, investing in staff training and development. 

As a small business the team at ServiceMaster understand the importance of knowing your monthly costs and what a disruption to cash flow that an unexpected bill can be.  The planned floor care programmes enable clients to know their costs every month for the whole year helping their financial control.

However you go about controlling the finances of your business it’s always useful to list down the key monthly costs you know about to get a good understanding of your break-even figure.

Benjamin Didier, Finance Controller @ ServiceMaster Torquay, 01803 200278

2017-05-23T15:48:40+00:00
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