As we fold our sleeves and get ready to work for the new year ahead, many entrepreneurs hope to recover from the losses of 2020. But, your business won’t spring back without a proper road map. Is your business’ budget for the year 2021 robust?
While there may still be uncertainty ahead, especially with the pandemic disruption, budgeting is a critical step in making sure your business is headed for success. Read our tips to help you outline a plan, set goals and make the right resource-allocation decisions.
1. Focus on the future
The previous year may not turn out the way we expected to. Make an objective assessment of your current position and focus on how you want your startup to continue operating into the following year. Start by asking yourself these questions:
- Do you have realistic revenue and profitability targets for 2021?
- What investments will make these goals a reality?
- Do you need to adjust your expenses and structures to achieve those goals?
Set out what your mid- and long-term goals are, so you can tweak your budget for the year accordingly. For instance, if you wish to double your sales, you may need to increase your marketing budget and make adjustments to your operational team. This also means you have to make difficult choices in other areas – with a laid-out plan, you can avoid wasting efforts and expenses.
2. Get accurate financials
Your financial statements report a critical purpose in reflecting the financial status of your business. It will help in monitoring progress and improving projections of where your business is going. Accuracy and consistency in preparing those statements are crucial so you can present reliable metrics that will help in updating the budget. As such, it’s best to leave this task to the professionals that offer accounting services to prepare accurate financial reporting.
At Ackenting Group, we understand that financials are the foundation of how you measure your business performance. Our accounting and bookkeeping services will provide accurate and reliable financial statements as well as give deeper insights to your business and operational efficiency. This way, you can accurately forecast your budgets and keep the expenses in line with income and sales.
3. Consider your business cycles
As you tweak the budget to fit your targets, take note of your business cycles. Plan your operations such that during your peak season the business is at full throttle. You can plan for the following during the peak:
- A full team, including contractors, to ensure flawless service delivery.
- Additional inventory to make sure there are no stock-outs.
- All systems are functioning to net in details about new customers and build new relationships.
Not having enough cash is risky for your business – thus, preventing this type of unwanted surprise is one of the main objectives of budgeting. Whether it is to invest in materials or employees, take note on how your business cycles drive your cash requirements.
4. Tax planning
There are various taxes, and each of them has a deadline. Although the Inland Revenue Authority of Singapore (IRAS) has simplified the process for small businesses, don’t wait until the eleventh hour to get your paperwork in order. Lateness and errors will only penalise you with fines.
When you set aside time to plan your taxes, it will also allow you to take advantage of incentives and save on your corporate taxes. Work with a tax advisor to help you figure out the calculations for you and maximise your deductions in the most tax-efficient manner.
5. Review the budget periodically
The events of 2020 remind us that the business environment can be volatile. Therefore, your budget should be flexible and robust to handle the unexpected. New and exciting opportunities arise every day – and sometimes they require investment in equipment, manpower or third-party services.
You can also work with an audit firm to identify inefficiencies, reduce costs and review activities that help to achieve organisational objectives. At Ackenting Group, we provide audit services to ensure the accuracy of reports and a fair representation of your startup’s financial position so you can always keep track of your progress.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
