Creating a Simple Budget

This month we wrap up our three-month series on planning for 2018 with a process for creating a simple budget. Below you'll also find a link to last year’s article on preparing for year-end financial tasks.
Many entrepreneurs—whether you work in the world of small business or nonprofits—are overwhelmed and intimidated when faced with the prospect of taking a deep dive into business financials. You spend all of your time and energy creating products and experiences, marketing, managing employees, serving clients and customers, tracking your daily income and expenses...the list goes on and on. But there’s nothing quite like creating a budget to help you reach your business goals. 

Create a Business Budget in Five Simple Steps: (from the Fresh Books Blog)

1. Tally Income Sources: start with figures from your profit & loss reports
2. Determine Fixed Costs: these are expenses that are the same each month, like rent or mortgage, phone and internet, web hosting, etc.
3. Include Variable Expenses: these typically can be scaled up or down, depending need and cash flow. An example might be advertising.
4. Predict One-Time Expenses: these might include capital improvements, investments in technology or equipment, or trainings and certifications
5. Put It All Together. Click here for a free template with example from QuickBooks.

Remember, a budget is not set in stone, it's simply a tool to help you make thoughtful decisions. Undoubtedly things will change and evolve over the course of the year. But it is a very helpful exercise, and taken together with the goal setting you've done, your marketing plan, your annual plan, and some good bookkeeping reports, you'll be empowered to grow and thrive in 2018 and beyond!

Do you see the value but feel overwhelmed by the thought of creating a budget for next year? Contact Clarity for help. We're your partner in designing financial health.

Build An Annual Plan for 2018

Annual Plans help you focus your energy; they help you say yes to the right things and no to the things that won’t serve your business. (No doesn’t have to be forever! It can just mean ‘not right now.’) They also help you measure your progress.

Here's a summary of steps you can take to create a rock solid annual plan. 

Start with a quick SWOT analysis. (Assess your Strengths, Weaknesses, Opportunities & Threats.)

Mission & Vision Statements.

  • Mission: Where are you going? Why are you in business?
  • Vision: Paint a picture of the business you would like in the long run. This is not time-specific. Don’t be afraid to dream big!

Annual Focus or Theme: You can pick a couple. Break them down into outward facing themes, (like adding a new product, program or service, or increasing customer satisfaction,) and inward facing themes, (improving systems, building your HR program, addressing strategic weaknesses.)

Goals: Bring in goals from your goal planning exercise —if needed, rewrite them so they are SMART. (Specific/Simple, Measurable, Attainable, Relevant, and Time Focused.)

  • Sales goals. They should be easy to understand and measure. For example: add three more desert sales each night. Add 5 more customers in your store per day.
  • Operations goals. For example, improve your database. Shift to QuickBooks Online. Revamp your website. Create an employee handbook.

Prioritize & Sequence: Review your goals to prioritize or consider necessary sequencing. Do some naturally come first? Are there goals (sales, for instance) that are specific to a season?

Breakdown: Break your large goals into component pieces. What are all the steps needed to accomplish each goal? Now assign a best-guess budget to each goal—you will feed this info into your 2018 Budget. (We’ll talk about this process next month.)

Anticipate obstacles and challenges: How will you overcome them? Imagine a worst-case scenario. How will it impact your business? Are there steps you can take now to ensure your business will survive, should the worst come to pass?

Timeline: Look at your 12-month calendar, and consider the natural ebb and flow of activities. Split your goals appropriately throughout the year, based on prioritization, natural synchronicity, or the most reasonable windows to devote time and energy to them. Working backward, break the steps needed to achieve your goals into quarterly or monthly goals.

Schedule regular times for reflection. Each week, each month, each quarter, review the timeline you’ve created. Celebrate your accomplishments, measure your progress, and adjust your deadlines.

*Remember, your plan doesn’t need to be perfect! Assume it is a starting point that will require revision and finessing as the year goes by.

Want help setting sales goals? Ready to shift to QuickBooks Online, but would feel more confident with a coach? Interested in building a database or a website? Need professional HR help in creating an employee handbook? Contact us. We’re your partner in creating financial health. We empower you to reach your goals.

Resources for this article:


Build A Marketing Plan for 2018

First things first: marketing is not the same thing advertising, though advertising can be an important part of a marketing plan. Marketing is promoting or selling products, services, or programs. It includes activities like market research, building your brand, identifying customers or constituents, building relationships with them, developing creative partnerships, among other things. 

The marketing plan that's right for you is as unique as your business. Here are a few tools and resources to consider.

To go beyond advertising in the yellow pages or on the web, start with this ten-point guide from Alyssa Gregory at The Balance. We have included a summary below, but click through to her post for more details: 10 Questions You Need to Answer to Create a Powerful Marketing Plan. 

"A marketing plan is an essential marketing tool for every small business. Start by answering these 10 questions:

  1. Marketing Strategy: How will your marketing plan support your business goals?
  2. Mission Statement: What are you trying to accomplish, and why?
  3. Target Market: Who are you trying to reach with your marketing activities?
  4. Competitive Analysis: Who are you up against, and where do you rank?
  5. Unique Selling Proposition: What makes your business unique?
  6. Pricing Strategy: What will you charge, and why?
  7. Promotional Plan: How will you reach your target market?
  8. Marketing Budget: How much money will you spend, and on what?
  9. Action List: What tasks do you need to complete to reach your marketing goals?
  10. Metrics: How are you implementing, and where can you improve?

Once you have completed each step, you will have a marketing plan that you are ready to use as a blueprint for your marketing activities in your small business."

If you don't have the juice to create and implement a full-on marketing plan, don't worry! Start small. There are many free or low-cost ways to boost your marketing program. Choose a few actions you can take to build connections and find clients or customers: examples include attending a mixer, writing an elevator pitch, or starting a client appreciation program. Here are more ideas:

6 Ways to Market Your Small Business for $100
10 Ways to Market Your Small Business on a Shoestring Budget
101 Marketing Ideas for Small Businesses

Either way, challenge yourself to write down the marketing tools you will use next year, and attach a time cost and a dollar cost to each activity. These numbers will help you create your budget for 2018.


Building Blocks for Success in 2018: Goal Setting

It's undeniably autumn, and therefore budget season--a time to reflect, refresh, and refocus, as we look ahead to 2018. Over the next few months, we'll share a few simple tools to help guide you through this process.

When planning, it's helpful to spend some time thinking about the big picture. Once you have a few high level goals for 2018, you can develop a marketing plan and annual work plan that will help you reach them, and a budget that will support your work. 

Goal Setting
Use the month of October to set goals using these four simple steps from Alyssa Gregory at The Balance:

1. Schedule a Few Minutes of Focused Time--away from work and other distractions. Take yourself out for coffee or a walk on the beach.
2. Pick a Theme for Your Goal--choose a dream, a niggling idea, or an area of work that needs attention. If time is short, stick with one. Write it down.
3. Make an Action List--brainstorm all the actions, large and small, that will be required to reach your goal. Break each action down into component actions. This list will probably change as you begin the work; it is enough for now to create an outline.
4. Make a Commitment--and write it down on paper! Make yourself accountable by sharing it with a partner, a colleague, a friend. 

You don't have to do all of your goal setting at once; try building three or four short sessions into your next couple of weeks.

Go forth and dream big!