Creating annual financial projections, and ensuring you do your monthly analysis properly will help you increase profit in your business and allow you more FREEDOM, GENEROSITY, and JOY in your business and your life. Here’s how to do it!
INCREASE YOUR PROFIT BY BUILDING THE BEST BUDGET
- Let’s get started with your budget spreadsheet. You can get our awesome budget template here to save you a ton of work or create your own in Excel or Google Sheets!
- You’ll need the first column to match the accounts exactly on your income statements.
- You’ll need a column for each month of your fiscal year, for your goal or budgeted numbers.
- You’ll need a second column for each month of your fiscal year for your actual results (your income statement) from that month.
- Our template also has columns for year-to-date budget and year-to-date actual numbers. We find this incredibly helpful, and you’ll want to make sure you look at the year-to-date numbers to get the real picture of how you’re doing each month! Some months are bad but then a great month can get you back on track for the year! And it’s all about that net profit at the end of the year, so keeping your eye on YTD (year-to-date) progress is key! *Our template has all of this built-in, including the account names, formulas, budget & actual month columns, and budget YTD and actual YTD columns!
- Before we enter our goals for income (break out all different types of products or services into sub-accounts), COGS (cost of goods sold), gross profit, overhead expenses, and net profit, let’s make sure your account names match your income statement exactly. This will make sure it’s efficient and easy to compare when you enter your actual income statements and do your analysis each month. *If you’re using our budget template the year-to-date columns will calculate themselves so you’ll never have to fill those in!
- Grab your last 5 years of your monthly income statements. This will be the last 60 monthly income statements. If you only have 12, use those! We just want to see past income and expenses, and look for trends, patterns, and mostly OPPORTUNITIES, as we build your financial projections (budget.)
- You will build your budget every year, line by line, but after the first year, you can just make a copy and update the numbers!
- As you build your budget each year, be optimistic, especially if you’re in one of our coaching programs or working with us, especially if you’re getting one on one coaching from us! You’re going to be learning and growing and improving SO MUCH those numbers will be WAY better than before!
FINANCIAL ANALYSIS EVERY MONTH INCREASES YOUR PROFIT
- Your monthly analysis of your goals versus actual numbers will show you exactly where to go and what to fix/change. For example, didn’t hit your revenue goal? Which sub-account or type of income did you not hit? Whose KPIs are supposed to add up to that? Did they have their monthly KPI coaching meeting? Is it our number of leads? Marketing? Conversion of those leads? Retention of clients? SO MANY PLACES TO LOOK! Put on your creative-problem-solver hat and figure out how to hit each goal the following month and every month after.
- During your monthly analysis, you should also be looking at monthly marketing reports, monthly KPI reports, along with your financial reports. Every quarter you should be reviewing your strategic plan action items. With these 4 reports, you should have the answer to ANY question about hitting or exceeding your financial projections!!!
- Remember as you are improving things each month, you must systemize the things that work and help you hit your goals, and STOP (systemize against) the things that have you NOT hit your goals.
- Also, try to think of how you could go 10 steps back and not have the problem happen again. For example, if your customer service specialist is consistently not hitting a goal because they refuse to do personal development, add a step to your hiring process to eliminate anyone who doesn’t do personal development! We need people who WANT TO GROW! If you’re interested in reading more about why personal growth is so important, check out this article from Forbes.
Remember, financial projections, and monthly analyses will absolutely help you increase your profit and allow you more FREEDOM, GENEROSITY, and JOY! Enjoy!
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