It’s Crunch Time
20th October 2011
It’s coming to the end of the year, therefore the start of another and that means it’s budget time. Now I don’t mean Michael Noonan’s budget for 2012 – that’ll be hard enough on us all – I mean your company budgets for 2012. Most micro businesses (less than 10 employees – and they make up 85% of all businesses in Ireland, see here http://www.synergy.ie/images/upload/165_sba_fact_sheet_ireland_eu_ent_ind.pdf) don’t make out annual budgets at all and many small businesses (less than 10-50 employees – and they make up nearly 12% of business) don’t plan either. So, for the mathematically astute people out there, 97% of all businesses in Ireland employ less than 50 people. Just as a point of interest, the EU average is nearly 99%, so Ireland is less than the EU average.
Many companies believe they don’t have the time to do them, others couldn’t be bothered, some don’t know how to do them, some believe they’re too small (they’re only for the bigger guys) and others are of the opinion that ‘we’ll do them tomorrow’. If your business has been running for a few years, then you have figures going back a few years. Have you looked at them critically and constructively? Now I don’t mean going over them with your accountant where he tells you what is wrong and what you should do – from an accountant’s viewpoint. Now don’t get me wrong here. I’m not slagging off accountants. They are great people who have trained for many years and have passed very stringent exams. What I’m saying is that they are trained to look back into the past and produce your figures. They are trained to always make 2+2 always equal 4. As a business person, who looks at your company as a business and with strategic eyes, you have to look at the future differently. If you need help here, then get it. Get a trained business planner to help you.
For a start, you have to develop your own crystal ball and you have to make best guestimates on what you are going to achieve in 2012. Is it up or down from 2011 or 2010? As a business person / entrepreneur, you have to make 2+2=4.1 or more. That’s your job. Consider it like Synergy (the name of our Company) where the result is greater than the sum of the parts.
You will look at your sources of income, where it will come from, how it will come in, who will do it, what you have to spend to make it happen, do you have to develop new products (MNCs examine hundreds of new products every month), new markets, new innovations, new machinery, training for staff and so on. AND, that’s only the start of it. Now, you have to do the exact same for your expenditure. Subtract one from the other (sounds simple, doesn’t it). Are you making a profit? Whats your cash flow like? Are you solvent? What’s your ROI? How do your profits (or losses) compare to previous years? What’s the trend?
Preparing budgets is vitally important. It takes time - your time – and that of your staff. It takes planning and knowhow. It takes commitment and belief. Belief in your business, your staff, your market and your ability to make it happen.
Go on – do it now. Take the first step for making 2012 better. Get your key staff together, talk about it & decide on a way forward. Don’t let anybody tell you it’s not necessary because it is. If they believe its not necessary, then they are taking the easy way out & you know, there is no easy way out.
As the old saying goes
“IF YOU FAIL TO PLAN, YOU PLAN TO FAIL”
And its very true