If you run a small business, you probably wear multiple hats. If one of those hats is “accountant,” you may find yourself struggling to devote enough time to truly fine-tune your business’s budget — let alone plan and predict your financial future. However, an ironclad budget and financial plan is crucial to your business’s profitability. Here’s how to effectively develop and execute your small business’s financial future.
Avoid siloing.
Without a comprehensive, inter-departmental reporting system, it’s hard to tell where budget drains are happening. You need to bring all your expenses and productivity measures into conversation to understand where your business could improve its profitability. If you’re attempting to reconcile static spreadsheets from various departments, it can cause an undue headache. Bring together collaborators from your various departments to build a foundation of accurate data. Then, use this foundation to better plan and predict your expenses and losses.
Insights from various departments and personnel can also help you better plan and predict your future expenses and earnings. Take a close look at trends, then see if improved collaboration or resource-sharing across departments could reduce your expenses and increase your profitability.
Implement an agile process.
The current economic climate is one of unpredictability. To be resilient, small businesses must be adaptable. Traditional predictive models or financial plans based on past trends likely won’t be accurate. Instead, your accounting team should regularly pull in and analyze data to adjust your budget and forecasts. This agile approach can save you trouble down the line.
Your financial reports should be used as a source of data to help you better manage your budget and financial plan. If you don’t have a dedicated accountant or accounting team, invest in an accounting/financial planning solution that can provide you with accurate forecasting and a more flexible budget.
Automate — especially your budget processes.
Managing budgets and financial records by hand is an enormous drain on your time and energy, and your accountant is much more likely to make costly errors if they use an outmoded system. There are many affordable budgeting and financial planning solutions that can automatically parse your business accounts and generate accurate data about your spending and expenses.
Plus, these solutions can draw in valuable data to help you improve your financial predictions. Automation can effectively track and analyze customer trends, seasonal rates, and departmental expenses to build a comprehensive portrait of your expenses, profits, and losses. You’ll likely see patterns and insights that you wouldn’t otherwise see. These can help you fine-tune your budget to maximize your profits.
Pull in external insights.
Of course, your business doesn’t exist in a vacuum. Your expenses, revenue, and ultimate profitability are all affected by current events. Many traditional accounting and financial planning solutions don’t have a way to accommodate market trends, consumer behavior, and other factors that could impact your expenses or revenue. To have a dynamic budget and resilient business, use modern accounting/financial planning solutions to pull in these external insights.
Artificial intelligence is increasingly affordable and can pay for itself by helping your business more accurately budget for expenses and predict income. A rigid budget or plan doesn’t accommodate natural fluctuations in external factors, but AI can easily process data and adjust your budget and predictions based on current economic circumstances. Look for cloud-based, AI-powered SaaS options to help your small business better accommodate external factors, and you might also consider a professional accounting/financial planning partner if you don’t yet have one.
Wrapping Up
Your business’s resilience relies on a flexible, agile budget and accurate, data-driven forecasts. To achieve these, it may be time to abandon your classic spreadsheets and rigid modeling, and start using AI-powered, agile solutions and processes. Fine-tuning your budget and financial plan requires a lot of data and insights that aren’t easily obtained or processed with traditional accounting methods. While it may seem like an extra expense to hire an agile accounting/financial planning team or employ modern software, it will ultimately allow your business to save money over time and boost your profitability by reducing errors and helping you adapt to strange and often seemingly unpredictable economic times.
