Budgeting and benchmarking your business - The Why

It is a cliche to say that you need to conceive to achieve. Setting goals is the first step toward achieving them. Perennial goal setters know the value of foresight, performers often use visualisation to supplement physical training and to feel good and do well.

In order to move from the distant and unreachable to the planned and obtainable it is important to both take stock of where you are right now relative to competitors and relative to your previous performance. This multi dimensional analysis is commonly referred to as benchmarking and is relatively common in business.

Having identified areas of strength relative to others and opportunities that others are chasing within your skill set, you can set specific, measurable, achievable, realistic, timebound actions to take you from where you presently are to where you want to go. We think it is incredibly valuable to think through the ramifications both financial and physical before you undertake an action. The process of thinking it through is contained in a budget. The budget ought to include the assumptions and expectations of the ripple effect of actions proposed to be taken all the way through to impact on the cash flow, the profit and the balance sheet health of a business.

On the flipside, areas of weakness or areas of threat can be mitigated or managed through a combination of defensive actions to neutralize a weakness or to guard against a threat. Businesses who complete these actions as a matter of habit tend to outperform others in their markets and be first movers in times of dynamic change such that they are not caught napping by technical obsolescence or outdated modes of activity.

In a family setting, it is the discerning expected utilisation of finite resources both time and money to find harmony between what is coming in and what is going out to achieve "choice". How we exercise choice is the difference between fulfillment and exasperation at the top of Maslow's hierarchy of needs. For the less fortunate it can be the difference between survival and thriving.

Better processes in both business and family will improve the probability of achieving the desired outcomes that have been conceived in the planning stages. There is no doubt decision making is enhanced when planned and methodical. Conversely, whilst crisis management can be invigorating, it generally only achieves average or sub optimal performance as the various ripple effects have not been properly thought through.

Would you and your business benefit from benchmarking and budgeting ahead of the next financial year?