The new year is almost here, so how are you going to budget for the year ahead?
By Craig Falck for Africa Report
Photograph: © Tom Wang | Dreamstime.com
First thing’s first: grab a pen and paper and list what you achieved in 2011. Next, on a second page, list what you want to achieve in 2012. If they’re comparable, you’re in luck. If there are major differences between the two, you might want to have a rethink about your future objectives. You need to be realistic and accept that the world is in serious trouble, especially when it comes to finances. You need to take these issues into consideration, because whatever you want to achieve is going to cost you. And chances are it’s not going to be cheap.
Every enterprise must look to expand on their business and perform better than in the previous term, no matter what the industry. To expand, you will need to invest money and spend money on vital needs such as equipment, motor vehicles, technology updates such as new computers, possibly faster internet, as well as other expenses that are incurred, maybe even hiring more staff. Assess what your enterprise currently spends on this sort of thing and then get quotes on what you want or will need. There’s no point in going overboard – remember, you’re spending your money here and if you make a mistake, it’s gone. If you need a delivery van, buy a reasonable model that will get the work done as well as have a little extra in reserve just in case. There’s no need to spend R1 million when you can spend R250 000. Likewise with computers, there’s no need to spend R20 000 on a laptop when a R5 000 one will do. This sort of spending will also have an effect on your cash flow, which has been previously discussed on Africa Report.
It’s a good idea to work out how much other factors that affect your business cost and how they’re also likely to increase in price. Stock and inventory could increase or decrease (if you’re lucky) in cost. This could mean the difference between you spending enough to get by every month or going on a splurge and buying a year’s supply at once. You need to take all of these factors into account, including salaries, bonuses, medical aid costs, etc. Once you have worked out all of these costs, you need to allocate them to their categories and finish off doing your maths. Once you come to the end figures, add a couple of thousand rand just to cover yourself for unexpected events. And there you have it: your 2012 budget.
When calculating your money matters for the next year, you know off the bat that it’s going to be more expensive than 2011. How much you’re willing to allocate for the year ahead will tell you whether you’re a hungry business person looking to win, or someone who’s happy staying where they are. So which are you?
