Budgeting and working out your business costs can feel intimidating at first, but it should form an essential part of your planning process. Balancing your budget will bring many advantages to both you and your business. On one side it will help reduce your stress levels as you will have a clear understanding of your financial situation and on the other it will help determine how well your business is performing.
Everyone will tend to have a slightly different approach or way of budgeting but it’s important you find the way which best suits you. One thing is for sure, keeping track of your budget is vital when establishing if you have enough to fund your existing operations and grow your business in the future.
Getting to grips with your utility bills and energy usage is one way of making sure your business is running as efficiently as possible and knowing when is best to renew your contracts forms a small part of that. Forecasting your future energy costs can be tricky but that’s where we come in! We can help you gain a better understanding of the energy market and when is the best time to renew your contracts based on actual market price movements.
With the help of Price Projector, we can forecast a ‘best time to renew’ by cross referencing an actual quote for your supply with real market knowhow. By using information that is relevant to you, combined with up-to-date market information, we can target our analysis, providing you with a report designed to assist you to make better decisions about your energy. Find out more about Price Projector.
There will always be unforeseen costs that arise. What you can do is have a good understanding and grasp of those expenses you do know about, which includes your utility bills. Hayley, our Head of Finance, is our budgeting queen and has put together some of her top tips to help you manage your finances.
1. Involve your employees
Budgeting needs to capture all business operations and getting input from relevant personnel who are skilled in their role will benefit the accuracy of your final version. Giving employees the responsibility of a small budget will allow them to feel empowered, make them accountable and in turn make them feel more valued.
2. Plan for different scenarios
It is good to be ambitious with targets, but it is also good to have an insight of what income is guaranteed. A worst-case scenario will give you a good understanding of what’s left to find or what we call ‘closing the gap’. It will create an overview of what you need to focus on to drive the business forward.
3. Secure costs where you can
Unknown costs such as increases to utility bills are always difficult to predict especially where the wholesale element of electricity supplies (which is reliant on market conditions) makes up 40% of the overall delivered cost. Securing costs, such as utilities, ahead of time will allow funds to be invested in more significant areas of your business.
4. Remember not to sacrifice quality
Using a cheaper product or service could cost you more in the long run, even if it is just your precious time. Afterall time is money too. Complete a benchmarking exercise and use experts who you can trust.
5. Revisit your budget
It is important to continuously monitor actual performance against budget and preparing a forecast at least mid-year will give you good insight into your end of year performance. This will allow you to rein in costs where necessary or release any unused accruals to ensure you achieve those year-end targets.
6. Communicate your budgets to your employees
By being honest and transparent with our finances in the nest, our individual targets are aligned to the overall company goals. This really helps everyone stay focused, feel valued and remain engaged with our vision.
We hope you will find something here to take away and help you in the future!
