Two tips for a great start to 2021 |
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Written by Colorado Green NOW |
Tuesday, December 22, 2020 03:00 AM |
As we look to close the books on 2020, there is still work to be done to get ready for 2021--even if snow removal is not on your service list. Here are two things you can do to help ensure a great start in 2021: Construct an operating budget for 2021 Having an operating budget for your business is like having Google Maps in your car. Both tools provide a roadmap to help you get where you want to go. Operating budgets are an indispensable business resource and are critical in helping leaders set goals for the company and for their employees. They are a measuring stick that helps determine how reality is comparing to pre-season predictions. And they are critical in helping to determine what changes can be made to help cope with unforeseen and unplanned circumstances, such as the COVID-19 pandemic of 2020, droughts, or recessions. Many accounting programs will create a budget based on actual data from previous years that is already in the accounting system. This provides a good starting point so you can then collaborate with your team about their own expectations for sales, expenses, personnel needs, etc. Taking that input and updating the information provided by your accounting system will give you a first pass at next year’s budget. Work with your team to refine this document until you have your ‘realistic’ budget for the next year. Now, do this exercise twice more – once considering the most optimistic ‘stretch’ goals you and your team think could happen if everything – retention, sales, expenses – goes exactly right. And finally, one that reflects the worst possible scenario – high client turnover, production problems, unforeseen economic or other circumstances which result in significantly less revenue. Use this exercise to discuss and plan for changes that would need to be made if the worst case happened so that you are prepared for it even if it (hopefully) does not come to pass. Finally, remember that your budget is a living document. Once complete, don’t just shove it in a drawer or put it in a binder. Consistently monitor your actual progress against it and make changes to the budget as you go, so that you are adjusting it to meet the reality of the current year. You may also want to construct a Capital Budget to address those capital expenses – equipment, improvements to property and building, etc. – that you are planning to make and what you can reasonably do based on each of the three scenarios you worked out in your operating budget. Verify assets listings are current as of 12/31 Steve Steele, MBA, is president at Steele Dynamic Services, LLC a green industry consulting firm based in Arvada, which focuses on internal business operations. He has over 20 years’ senior and executive-level management experience in a variety of industries and has served the landscape industry through ALCC on the board of directors and legislative committees. Learn more at SteeleDynamicServices.com. Read more in this issue of Colorado Green NOW: |