These years just keep getting faster…
Right now you’ve hopefully had a lovely break and thinking that getting stuck in can probably wait a few more days. That’s cool. But that’s exactly the reason why your business year should start now, not 1 July. A fresh sheet of paper and all that, not just picking up from where you left off last year.
The way to do that is to jump into Xero and change your financial year end to 31 December (In settings/financial settings). Don’t worry about the tax folk, they can still do your tax return. Then do a budget for the comming year. Putting it straight into Xero is an easy way to do that.
A budget is obviously critical for resource planning and risk management but it is also just a peg in the ground that you can measure from, don’t get too stressed about what happens if things might change.
The best approach is to have just one budget that you use as a starting point for rolling forecasts each month. Xero will let you save as many forecasts (they call them budgets) as you like, then you just select any of your forecasts when you run a report of profit against budget. Or you can do it in excel if you prefer by exporting your P&L from Xero to excel. Tip, if you run a P&L by month to the end of the year it will display budget values for the future months.
The main thing is, you entering the numbers is what makes this so effective as a management tool, like doing a cash flow forecast, as you see what’s changed you get to think about why, and what you might want to do about it. And like most things, once you get started it can be sort of enjoyable, or at least satisfying.
Let’s do this. But first coffee.