Budgets for 2010
08/01/2010
If you haven't already done so it isn't too late to think about setting a budget for 2010.
Some smaller owner managed businesses may run the dealership in a more relaxed way and not see the need to plan.
You may find the actual task of setting the budget a little daunting?
Perhaps the day to day running of the business is preventing you from seeing the bigger picture?
Think of the budget as simply putting down on paper your plan for the future of your business. The process of preparing the budget can make a difference to the growth of your business. It can help to provide focus on the objectives, helps you to set targets to monitor performance, aids decision making and can be a very useful tool for staff motivation.
The budget need not, in fact it should not, be complicated. A budget which is going to collect dust in the bottom drawer is not a useful business tool. A simple useful budget will be referred to on a weekly, or even daily basis. Below are some key tips to assist you: -
- Budget for success, don't budget to fail, but be realistic.
- Don't budget to have bad debt write-offs, improve your credit control process instead.
- Don't budget to sell 800 labour hours per month if you only have 3 technicians. If you think you can sell 800 hours per month ensure you have the resource available.
- Ensure you are fully aware of all costs - rent, rates, depreciation, salaries etc.
- Share the process with department managers, ownership of the budget is a sure way to motivate managers to achieve targets.
When you are happy with the plan the greatest benefit can be obtained by linking the budget to the monthly management accounts, thereby giving the advantage of measuring actual performance against plan. It may help you to identify problem areas earlier than would otherwise have been possible. Don't be afraid to change the budget if conditions change during the year.
Finally if you would like some help in setting your budget, or in any other areas, please contact our Dealership Assistance team.