Scorecards and dashboards are popular measurement tools because they reveal the budget issues within a company. While budgeting isn’t just for beginners, most people are beginners at budgeting.
Budget both income and costs. To set an income budget, figure out how much income you need to break even and then be profitable. As the owner, include paying yourself. Then work backward to how many units of your product or hours of your service you must sell to reach those figures.
Track your budget daily, monthly, and year-to-date. The daily budget tracking allows you to spot problems and fix them quickly, and is really an early-warning system. The monthly budget smoothes those daily fluctuations, and allows comparison of the amount actually spent or earned with the amount budgeted. The year-to-date comparison allows you to track the accumulated monthly expenses, understand seasonality, and tract profitability.
Be strict about meeting those budget goals. Demand that revenue goals be met, and track down the causes of cost overruns.
With luck, you will be selling more product than budgeted, and spending less. Using your budget as a scorecard or a dashboard puts you in control of your money.
Marilyn Holt, CMC
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