The End of the Year is Here

Its mid-November already.  Thanksgiving is next week, which means you should be well into your 2010 planning.

 If that’s not a natural process for your business, there’s no time like a recession to get started.  When times are tough its particularly important to have a financial plan. Now’s the time when you managers and team need to know their income goals, their service targets and how that translates to the bottom line.

The hardest part is getting started.  Make the decision that you need a 2010 budget and you’ve made the most important decision – to get ‘er done.  Most business owners make the mistake of trying to perfect a forecast without realizing that , by definition, a budget is wrong.  You can’t predict the future, so don’t spend a lot of time to get it just right. Just get your best estimate in place and recognize that its going to change.

Thats’ where your forecast come in.  A budget is a projectoin for the next year.  A forecast is an update to the budget that is usually done quarterly.  I find the forecast vs actual to be more valuable than the budget vs actual.  Why?  Because the budget is done around Thanksgiving and doesn’t change. The forecast is based on changes to the business in the prior quarter and more accurately projects what you think you should be doing.  Its important to have that static budget, so you can see how to improve your budgeting for future years, but focus on the variance vs forecast to see how your business is really doing.

So get ready to enjoy the Turkey, but spend some time over the long weekend working your best guess of what 2010 is going to look like so you have a baseline to compare actual results against.