No company can get by these days without having activity reports and budget spreadsheets, with the latter being particularly important because it’s directly involved with your company’s spending. For small and medium-sized companies, with revenues of up to $ 15 million a year, this spreadsheet is even more crucial due to the number of competitors out there, the constant need to cut costs to improve your cash flow, and the need to have alternatives available when you’re faced with making strategic decisions.
With a well-structure budget spreadsheet, you’ll have everything a manager looks for: control over your procedures and a broad, clear vision of what spending may be unnecessary. In today’s post, we’ll offer a few tips about budget spreadsheets and how to develop them for your company. Check it out!
What should a budget spreadsheet contain?
There are two easy ways to mount a spreadsheet: using Excel or Google Sheets (located on the Google Drive). These forms will guarantee that you can organize your data quickly without any difficulties. Then it’s essential that you divide it into periods, months or weeks, so that you can make future comparisons about your increased or decreased spending and revenues.
Then you should describe each expense in the selected period (labor, inputs, electricity, water, fuel, etc.). With a comparison of this spending in hand, set a goal and try to achieve it, or in other words, this spreadsheet will make it obvious if there’s waste occurring during a given period, and you can take the necessary steps to correct it or come up with alternatives that won’t affect productivity.
This is the main reason to develop a spreadsheet. If you have control over your budget, you’ll know how to manage your costs efficiently, and will know when you need to increase investment, guaranteeing reliable financial analysis.
Another benefit of developing a budget spreadsheet is it gives you greater agility in making financial analyses – which was unlikely to occur before – and it will offer responses for possible problems that can arise. Thus you’ll be better able to understand your situation and respond appropriately.
Remember: even though it’s a cliché, the phrase “time is money” is quite true.
Theory and practice
Everything that has been mentioned here is nothing more than planning for your company. Well-executed planning will ensure that your company survives and even expands, no matter what the current market situation may be.
What is its importance?
But the bottom line is, how important is a budget spreadsheet to your company? At the beginning of this article, we mentioned the need to improve cash flow, which means nothing more than oiling the corporate machine. This will save your company during economic downturns and will guarantee that all of your company’s commitments will be honored. With a budget spreadsheet, your company will have a healthy cash flow and will be ready for any situation.
It’s essential that the budget spreadsheet be filled in by a single professional, or at most by a small team, so that the data will always be reliable. In addition, since this is a strategic tool, all managers with decision making power should be aware of this data, because nothing will happen without a green light from them, including concrete changes such as cost cutting.
Do you know the challenges of cost reduction? Then click here and download the e-Book “The 7 biggest challenges to efficient cost reduction” right now.