Budget management is a defining instrument for running a business and keeping it under control towards the desired success.
A budget facilitates the proper use of resources and promotes the efficiency of operations.
Having an annual budget allows us to make decisions aimed at achieving our planned objectives. Its correct implementation goes beyond the writing of a working document. In fact, it is also a means of control for our business. We can use it as a fundamental tool to measure and compare how the company is germany email list doing in relation to the stipulated annual objectives .
Logically, the arrival of events and situations of a certain relevance that are new and not foreseen at the time of preparing the budget calls us to make a review so that it continues to be a useful tool.
This is where an advisor must work closely with his clients to update this important tool.
The starting point for reviewing the budget
When analyzing where we should focus and what adjustments we should make, the first thing we should review is our objectives. We must maintain fluid contact between advisor and client that is aimed, first of all, at finding out some key aspects:
What are our current strengths and weaknesses?
How we find ourselves in our sectoral framework of reference.
Very important: what steps are our main competitors taking ?
Tools that help consolidate the relationship between advisor and client help outline new objectives more quickly
In this way, we will try to focus on the feelings of our current or future clients and analyze whether their needs remain the same or have changed. Once we have studied the circumstances and set realistic objectives, in accordance with the current situation , we will review our budget and adjust its three most important items:
Typically, our previous budget would have been based on an estimate of sales in an environment similar to that of last year. And, even if we had considered possible contingencies that could affect us, it would normally not have taken into account the reduction in activity that had occurred.
Therefore, the first thing we must do is estimate our income as accurately as possible. To do this, we will take the following steps.
Define our current market share
We must think about and define what our specific market niche is after the latest events and how our products or services may have been affected. We will try to act in what we know how to do and in our target market, without losing sight of other possible ones, always without taking risks and, of course, without ever losing our differentiation from the rest of the competition .
We will analyze what we are facing and how we can do it in the best way, taking into account:
What will the market's behavior be ? We are interested in knowing whether, for our specific case, the forecast will be a market with constant growth or, on the contrary, a new situation with a volatile market and unpredictable movements.
Price sensitivity . We will measure it by assessing what our customers are willing to pay for our product or service.
Upcoming moves . New legislation, updates, requirements… We will interpret how these possible changes may affect our sales.
Sales data collection
In order to make our new sales estimate, we must be sure that the data we handle is as accurate and real as possible. Without it, no forecast can be accurate and, therefore, cannot provide us with acceptable results . If we handle unreliable data, we will obtain useless results.