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How Often Should You Review Your Budget?

By | May 24, 2021

Do you have a budget? Is it current? Why do I need a budget do you ask? Business Advisor, Daniel Lalic, explains the importance of reviewing your budget and why you need to do it more than once a year. 

Many businesses move from one financial year to the next with their only performance target being a comparison to last year. Or better yet, a budget they created three years ago which still sits somewhere in the background of their accounting software.

Whilst I am going to flat out tell you that is not okay, I am also going to highlight that all businesses are coming off what has been the craziest twelve months of trading I can remember. Regardless of your business type, you no doubt felt the impact of COVD-19 to some degree. For some it was a struggle, for some it was prosperous and for others, it was an opportunity to pivot their business and take advantage of new opportunities.

Regardless of your situation, last year is no longer a normal comparison, because like it or not, the way we do business has been significantly impacted in one way or another.

There has never been a more important time to have a budget than right now and with the new financial year fast approaching, what better time to run you through the advantages and disadvantages of having a budget.

The advantages of having a budget:

  • Forced planning for the year ahead
  • Clearly defined goals/targets to achieve
  • Benchmark for business performance expectations
  • Reality check on growth expectations
  • Assistance as a decision-making tool
  • Help plan for equipment purchases, business acquisitions, hiring of new staff
  • Assisting with understanding seasonality and the impact this has on your workforce

The disadvantages of having a budget:

Still trying to think of one…

What are you waiting for, the new financial year is fast approaching and it is the perfect time for you to prepare a budget. Feel free to reach out to your trusted advisor should you require any assistance on (08) 8172 1444 or email: enquiries@altitudeadvisory.com.au

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