Financial Success Roadmap AKA Budgeting
The financial success roadmap is also known as budgeting. I don’t like to call it budgeting as it seems to get a bad rap and most business owners don’t like or enjoy it and usually avoid it. The financial success roadmap involves tracking historical performance so that the business can forecast expected revenues, expenses, and cash-flow. These expected costs and income should correlate to your business goals and helps monitor them throughout the year. Let’s look at the benefits of completing the financial success roadmap.
Helps Organize Your Expenses – All transactions within your business are broke down into categories and by tracking these categories you will be able to organize your expected expenses throughout the year. Each month you will be able to see how much was spent in each one of these categories.
Makes You Aware – When all revenues and expenses are tracked in each of these categories, you are aware of what revenue is coming in, how fast the money is going out and where it is going. Each month you will know where all your money came from and where it went.
Provides Clear Intentions – The financial success roadmap will provide clear intentions of your financial goals, expected expenses and revenues. This ensures everyone within your team is on the same page and working toward a common goal.
Prepares You for the Unexpected – The unexpected expenses can affect your financial goals as well as your cash-flow. Your business needs to have a cash reserve for unexpected expenses. By contributing to this cash reserve you can improve your ability to pay for these unexpected costs that may arise.
Keeps You Focused on Your Goals – By monitoring revenues and expenses, you will be able to stay focused on your goals. Each month you will be able to see if you are on track or if adjustments need to be made.
Provides an Early Warning for Potential Problems – Each business has fluctuating cash-flow meaning the amount of revenues made each month can vary and by tracking your revenues and expenses, you can determine ahead of time if adjustments need to be made. You can also make necessary adjustments month to month on any unnecessary expenses that can be avoided or on any revenue shortages that need to be addressed.
Gives You a Measuring Stick – Each month you can compare what you expected your revenues and expenses to be with the actual financials. You can also track your financials from the previous year. This “measuring stick” can also be utilized to compare your business to other businesses within your same industry.
The financial success roadmap can have many different benefits to your business. The goals of your business can be monitored, and adjustments can be made to help achieve them. This can be completed through looking at your historical performance, your future goals and determining your expected revenues and expenses by month and tracking your actual performance throughout the year.