Sprout Accounting
business budgeting

Budgeting For Business

So, you have accurate financial information each month, but how did your company do?


There are a few different ways to evaluate your company’s performance. You can look at how you did the month before. You can look at how you did the year before. Or, you can look at how similar company’s did or you can look at how you performed relative to your budget.
The simplest thing to do is to look at your previous month and see if profit is increasing or decreasing or if sales or expenses are increasing or decreasing. That’s the first step in answering the question “how was my month?” One challenge to this is when there are certain slower periods of the year.
As we finish up the summer many of our clients have had slower months. Their customers were away, they were away, or their staff were taking some time off to recharge on vacation. Just because sales decreased from June to July doesn’t mean July was a bad month. Many businesses have seasonality to them when it’s reasonable for sales and profit to decrease.
The other challenge to looking at the preceding month is that it’s like looking in the rear view mirror when you’re trying to drive forward. You’re looking at where you’ve been instead of looking where you’re going.


You could compare to similar peer companies with publicly available financial information but finding a comparable public company can be hard. Public companies tend to be larger so the financial situation of that company and your own can be quite different.
A budget is a target you set to determine how you want your year to look with respect to sales, expenses and profit. It recognizes the seasonality of the business and gives you a goal to aim for each month. If you’re over budget you can start to dig into why. Too much spending on office supplies? Not enough sales meetings to meet your new sales targets?

Next Steps:

If you’d like to develop a budget for your company for 2023 now is the time to do it.
Have your budget in place for the start of the year. Get in touch with us today to talk more about how Sprout can help.

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