American Business Women’s AssociationJune 12, 2010

Presented by:Presented by:

Wendy RobinsonWendy Robinson

Budgeting and Forecasting for the

Non-Accountant

Boring…I know!So…

The NEW title of my

presentation is…

Why Small Business Owners Hate the

Numbers and How They Can Learn to Love Them!

American Business Women’s AssociationJune 12, 2010

Presented by:Presented by:

Wendy Robinson, The Queen of Busting the Bookkeeping

Blues!

To elevate more professionalism, we seek to inspire and educate on how to

Be Prepared; Up Your Game

and Choose Success.

Our mission and goal in serving you:

Why You Hate the Numbers

• Not good at it…

• No time; You’re too busy doing “the work”

• Just can’t keep track of all the receipts

• Not sure what to track and what not to track

• Don’t know how to organize and create systems on all the ways the money comes and goes…

Why You Hate the Numbers cont…

• It’s not “GLAM”!

• Don’t know what to do so you practice avoidance until April 15th…

Why You SHOULD Love Your Numbers

• Prevent overdrawn bank accounts and the fees the banks steal from us (my apologies to all the bankers in the house!)

• Avoid being disorganized at tax time…wasted time and money

• Business Mgmt. Decisions…Long and Short Term

• ROI

Number One Reason to LOVE Your Numbers…

• Being in control of your numbers…– Saves you time…– Saves you money– MAKES you money– Helps you avoid effort

…all so you can concentrate on all the “GLAM” work in your business…which is the reason you went into business in the first place!

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Today’s Overview• The difference between budgeting and

forecasting

• Why having both are important in business

• Simple steps for creating a budget and forecast

• The types of managerial decisions that can be made by having a good budget and forecast

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The difference between budgeting and

forecasting• Usually done once a year, the budget sets

minimum requirements for a company to meet its financial goals.

• Done more often, a forecast is usually an expectation of what is likely to happen based on more current indicators.

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Resources and Tools Needed for Budgeting

• Time, Staff and Software all needed to:– Gather information – both current and historical– Create a model – timeframe to be used– Make assumptions – for increases/decreases– Compare and evaluate data – what does it tell

you?

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Steps in Developing a Budget

• Establish a base year or period• Assess revenue and expenditure

growth trends• Clearly specify underlying

assumptions • Assess the reliability of the data used

in assumptions

Three Easy Steps in Developing a Budget

• Calculate a daily rate (total divided by 92)

• Annualize your base period (multiply the daily rate x 365 days)

• Create your annual budget based on the number of days in the month. (multiply the daily rate x number of days in each month)

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Take Small Bites• Don’t try to project everything• Pick the big things

– Revenue– Salaries– Marketing and Advertising– Office Expenses

• Narrow those down– Service vs Product Revenue– Full vs Part-time salaries– Print and Online Resources– Phone, Fax, Internet, etc.

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Adjust Where Necessary…

• Controllable– Part-time salaries; virtual administrative help– Non performing marketing methods– Non essential supplies

• Uncontrollable– Utilities– Debt Payments– Full-time salaries

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Growth = Changes, changes…

• You’ve hired a new sales person…

• You now offer two new products…

• You’ve purchased a new color laser printer to replace the old black and white inkjet…

• You’ve just hired a coach

Now, Forecast Monthly…

• Create a forecast using your budget and current indicators.

• Increase or decrease the numbers based on what’s happening in your business now…

• This new schedule of numbers is now known as your Forecast

And Enter Your Actual Results…

• Look at your numbers monthly or at least, quarterly…

• Look for out of the ordinary swings from budget and forecast and make a note…

• Make improvements to operations or find more revenue!

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What Will This Tell Me? Comparing and Evaluating

Your Budget/Forecast • How does our position look compared to

last year? Three years ago?

• Will we have enough funds to continue services and operate? To increase them?

• Do we need to find new sources of revenue?

• Should we postpone or cancel the big, office party next month?

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Final Tips…• Being Conservative is Best

– Estimate variable revenues low– Estimate variable expenses like utilities higher

than what you may spend

• This will help to provide “emergency” dollars if your revenue does come in lower and/or expenses are higher

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Final Tips…• Projections are estimates of future

operating results– YOU WILL BE WRONG! SO PREPARE!

• Projections can backfire– The “Chicken Little” Syndrome– Don’t be the “We’re Going Broke” Poster Child

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Budgeting and Forecasting is Not an

Exact Science• It is a both an art (best “guesstimates”)

and a science (actual past figures)

• It is NOT a fossil – once done, it is not done forever. To be meaningful, it must be constantly updated

• The more you work on your budgeting and forecasting, the more “in tune” you become with your business and how it operates.

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Questions and Answers

• Contact me:

–Email:Wendy@WendyJay.com

–Web:www.WendyJay.com

–Direct: 602-492-1011