Posts Tagged ‘budget’

Financial Details Can Mask the Big Picture

Do you sometimes find yourself bogged down in the financial details of your business? If so you may be missing some important insights. By insights I mean seeing and comprehending the true essence of something. When it comes to the financial aspects of your business the financial details can mask the big picture if you get caught up in them. Read the rest of this entry »

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Actively Manage Expenses to Increase Cash

Increasing cash involves paying attention to numerous things and acting in a timely manner. Let’s briefly look at how expenses impact this. This is the last of a series of posts on this topic, following ones on converting Read the rest of this entry »

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Manage Your Liabilities to Increase Cash

While accounts receivable and inventory are two assets that can dramatically impact cash, it is important to consider liabilities as well. Read the rest of this entry »

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Know What Causes Your Cash Balance

Do you really know what causes your cash balance? I suspect many people don’t really stop to consider this.

It’s Not the Cash

In the blog Cash Management-It’s Not About the Cash Account I wrote about this some, but now I want to reemphasize what I think is often overlooked. Read the rest of this entry »

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Unnecessary Spending

If we look closely we can see personal spending that was unnecessary. In business it can be more difficult to identify unnecessary spending. Ever wonder why? Read the rest of this entry »

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Budgeting Realities

I’m not sure I’ve ever met anyone who truly enjoyed the budgeting process. I think there are some ways to make the process less difficult and more realistic. Below are some things that I believe are usually budgeting realities that hinder performance by distorting expectations.

What Shapes the Future

  1. “Change your thoughts and you change your world.” – Norman Vincent Peale
  2. “We cannot direct the wind, but we can adjust the sails.” – B.N. Woodson
  3. “You may have made some mistakes and you may not be where you want to be, but that’s got nothing to do with your future.” – Zig Ziglar

So, why did I start with these four quotes? Well, frankly, taken together they summarize what I believe is possibly the biggest pitfall to budgeting.

We Can’t Do Any Better

Quotes number 1 and 2 are critical. How often have you heard excuses (often disguised as good reasons) such as “We struggled to get the sales we did last year and the market looks even tougher this year”, or “We’re barely keeping our heads above water now, so how do you expect us to get by with less?” There are many along the same line, but the support for this is rooted in thinking. If you go into the budget process with the presupposition that the status quo is the best there can be, you start out defeated. It is critical to question your thinking and test it to see if it really holds true. Maybe there’s another way to sell more. Maybe there is another way to do things that makes it possible to accomplish your goals with fewer resources. But, unless you are willing to honestly question your assumptions you will miss opportunities. You must change your thinking to adjust your business sails. Chart a totally new course if necessary.

Stuck in the Past

It is common when developing a budget to use the prior year’s budget or actual results or a combination of the two as a base to build the current budget. At first that may seem like a very logical idea. But is it? To complicate matters some people fear change because something did not work out in the past. Their position is, “We tried other things before that didn’t work and just look where we are now.” It is one of the budgeting realities that past failure tends to make people afraid to again try something new. They’d rather stay where they are?

Look again at the third quote quotes above and let’s see how it relates to faulty thinking in the budgeting process. I realize that some people buy into the idea that history repeats itself, but does it have to? The answer is no.

So things you previously tried didn’t work out, and you don’t like where your company or department or even you are at present. So what? Unless you are willing to take risks where you are now is where you will be next year and the year after and the year after that and on and on. When it comes to creating a budget, one of the budgeting realities that must be faced is that business owners and their employees hold the key to the future, and unless they are willing to change then there will be no forward movement.

What about you and your company? Is creating a budget just an exercise in futility and a mere formality? It doesn’t have to be. Get out of the past and be willing to change.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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Some Key Financial Indicators

If you are attempting to manage a business you must have timely and meaningful financial indicators. Many companies do this with some sort of financial dashboard, but whatever your method, here are a few things to be on top of.

Some Balance Sheet Data

Keep up with some key balance sheet data. This should be done at a minimum monthly, but preferably weekly or even daily, depending on the particular piece of information. Here are some of the key financial indicators to track: Read the rest of this entry »

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5 Tips About the Income Statement

I’m amazed at how often someone looks at their company’s income statement and immediately zeroes in on the bottom line; the net profit. Of course, the net profit is important, but if you stop there you will miss some useful information that can be obtained from this statement. Here are 5 tips about the income statement.

Patterns and Trends

It helps to dig into the individual lines on the income statement. For example, suppose you are a distributor. Take a look at Read the rest of this entry »

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Out of Control Expenses

Expenses are one of those things that sneak up on us. For a few months everything may seem reasonable, but suddenly everything seems to change for the worse and you have out of control expenses. You’ve probably experienced this on a personal level. You may find yourself asking, Read the rest of this entry »

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What QuickBooks Product Should You Use?

In a previous blog Critical Questions When Considering QuickBooks we looked at some of the things to consider when deciding whether to use QuickBooks or some other accounting software. Assuming you have decided upon QuickBooks, let’s look now at some considerations when selecting the actual QuickBooks product to use.

Your Needs

In the previously mentioned blog was a partial list of things to consider when deciding if QuickBooks was the correct choice. Take a moment to review that list, as it is also very helpful in deciding the correct QuickBooks product to use. For example, the first item listed asked if Read the rest of this entry »

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