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March 14, 2014 — A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.
By Bruce Morse, WSBDC Region 2 director
“Should I be preparing an annual budget? And am I too late for this year?” Ken, Ranchester
The short answer, Ken, is yes and no.
I always recommend that business owners prepare an annual budget as part of their strategic planning process. As far as being too late goes, larger companies typically prepare a budget before the start of the new fiscal year.
However, from a practical standpoint, many small businesses owners have yet to complete their year-end accounting until about now. Working from last year’s information makes it easier to prepare this year’s budget.
So, no, it’s certainly not too late. Let me suggest that you take a slightly different approach to preparing your budget than some might.
Start with the end in mind. In other words, pick a target profit number that you would like to achieve, then work backward to figure out how to get there. It might involve trimming expenses, gaining efficiency in your production or workforce, improving your gross profit margin or simply selling more.
Most likely, it will be some combination of these. Remember, bigger -- at least in terms of sales -- is not always better.
If you have other staff, involve them in this discussion so everyone has some ownership in the goal. Plus, they more than likely will have suggestions for improvement that you have not thought about. Whatever you do, take positive steps to make it happen. Do not simply blame the economy and hope that next year will be better. Hope is not a great strategy.
If you need assistance in working through this process, contact a local WSBDC representative for guidance.
A blog version of this article and an opportunity to post comments is available at http://wyen.biz/blog1/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email firstname.lastname@example.org or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.