forecasting Archives - Next Level Now

Business Budgeting: 4 Steps to Create a Company Financial Plan

Creating a budget is an important part of running a successful business. However, creating a budget or company financial plan can be difficult. That’s where Next Level Now comes in; our outsourced financial services will help you get your spending in check to optimize business growth. Learn four steps to start budgeting your business.

How to Create an Effective Budget

Here are four tips to help you create an effective budget:

Start With a Purpose. A clear purpose will help you create an effective budget. Begin with an overall goal for your business. Then determine how your budget can help you achieve that goal. For example, you may decide that your goal for this year is to grow your sales by 10%. In order to accomplish that, you will need to spend some money on advertising or marketing. So your first budget line item should account for those expenses.
Do Your Research. Gather as much information as possible before you start drafting your budget. Use the previous year’s sales figures as a starting point. Compare this year’s numbers to last year’s figures to determine any increase or decrease in sales. Find out how much each department contributed to last year’s sales and how much of that contribution is expected to continue this year. This will help you determine which departments will receive the biggest share of the budget. Once you have finished your research, you can draft a first draft of your budget.
Consider Your Employees and Their Needs. An employee spending policy is an essential part of every business’ budget. It outlines the rules for employee spending and helps companies avoid potential legal issues down the road. Make sure you outline clear guidelines for employee spending in your budget. For example, you may want to specify that employees should not use company funds for personal purchases such as new clothes or electronics. You will also need to set a maximum limit on individual spending and provide guidelines on how bonuses and other compensation should be distributed throughout the year.
Be Realistic. Know your numbers and stick to them. In other words, don’t fudge the numbers just to get more money in the budget. A successful budget is based on accurate data, not wishful thinking. If your revenues are less than expected, you may need to revise the budget to reflect your current financial circumstances. On the other hand, if your revenues are higher than expected, you will want to adjust your budget to account for those extra funds.

Determining a Company Financial Plan Is Important For Business Growth

When a company begins to expand it will need to determine what it needs for expansion and what its current capital requirements are. The budget for running a business should include all costs related to daily operations as well as the costs of expanding operations. This includes everything from salaries to utilities to travel costs to office equipment and everything in between. Businesses should prepare annual budgets to make sure they are getting the most from their financial resources while staying within their set budgets.

How to Make Your Business SOAR

Setting a budget and a realistic company financial plan is just an initial step towards business growth. Next Level Now’s SOAR+ will help you gain financial expertise at a fraction of the cost of hiring internally. Our experts handle the financials while allowing you to nurture the other vital areas of your business. This winning formula will boost your company’s profitability and success. Contact us to start today!

Five Metrics that Predict Success for Professional Service Organizations

Professional Service Organizations (PSOs) often face a distinct array of challenges to foster success and growth. And predictability is key in ensuring that you meet stakeholder’s expectations to support the goals of your organization. Learn how to create a profitable and predictable business through our top five metrics for success below:

Forecast Revenue

In order to appropriately forecast revenue and boost your Professional Service Organization’s success, you need to have a solid understanding of seasonality and trends. By understanding your revenue types, you can plan and allocate for each service in a manageable way. To do this, you will need to complete the following:

Form a commitment with your organization top-down to build accurate forecasting
Forecast at several levels: project, portfolio, resource, and risk
Become predictable by preparing your organization appropriately for what’s to come and create repeatable patterns

Moreover, to begin forecasting you will need to properly assess employee bandwidth, and ensure frequent communication within your company. You should also establish clear goals and learn from your experiences to improve precision. Also, you should also prioritize your focus to encourage negotiations among stakeholders and remove potential obstacles.

Analyze Your Budgets vs. Actuals

Additionally, you will also want to review your budgeting process and how those numbers compare to actual spending. By crafting metrics, you can forecast accurately to improve this ratio. This is key to make your organization predictable and to ensure projects are aligned to strategic goals. Furthermore, you should also ensure that you have the right people in the right place. By understanding your budget and actuals, you can also improve company capacity and have effective KPIs in place to be on track.

Succeed with Capacity Planning

Ask yourself if you have the resources to meet current demands in your organization and if you can realistically take on more work. Capacity planning enables you to know what you can take on. And it offers you the flexibility to communicate the impact of taking on additional work outside of your scope. Through capacity planning, you are factoring in realistic expectations and actual working hours to appropriately value proposition your employees.

Utilization and Outcomes

Although some organizations are moving away from utilization and looking towards outcomes, it is important to consider if your resources are maximizing their billable time. And if high-value resources are attributed to high-value work. You should account for the following:

Appropriate resource assignments
High-level or enterprise-wide planning to maximize utilization
Differentiated billable and nonbillable hours

Professional Service Organizations and Project Management

Project management is integral for delivering client projects on time and on budget while maintaining your company’s profit margins. Organizations that undervalue project management have reported an average of 50% or more of their projects failing. On the other hand, high-performing organizations that prioritize project management successfully complete 89% of their projects. Making sure to prioritize project management is a key factor in its success.

By manage capacity, forecasting, and establishing efficient project management, your company can become more predictable and attain the backbone to succeed. For a more comprehensive discussion regarding the five-performance metrics, view our most recent webinar below, or contact us for a free business assessment!