Budgeting for Better Success
Many company owners conduct business without a financial plan, oftentimes with negative impact to their bottom line. Learn how a budget can help secure your operation.
How your company has defined its financial reporting requirements dictates how its GL (general ledger) accounts have been structured. This is because transactions are tracked in GL accounts that feed the financial reporting system. Consequently, it follows that the structure of your budget should generally mirror your GL account structure so that the budget can be easily compared to actual results.
If your company operates multiple branches, it’s best to create separate worksheets with the same structure for each branch. Then, it’s easy to consolidate the individual branch budgets into one summary worksheet.
CREATING, USING THE BUDGET
While there are sophisticated financial modeling and budgeting tools that could be used to create your budget, most security and systems integration companies will find that using a spreadsheet like Microsoft Excel is sufficient. A certain level of spreadsheet experience is required by the developer, but more importantly the owner/manager must supply the developer with the many assumptions that will support the budget numbers.
For instance, your company may track alarm system installations separately from fire system installations. Average sale price, unit sales, costs (materials, labor, commissions and other) and other factors would be different for each type of installation and would be programmed into the spreadsheet as variables.
Your budget should be compared monthly or quarterly to actual results and significant variances should be investigated. The manner in which you are able to do this comparison depends on the capabilities of your accounting system.
Some accounting systems have integrated budgeting functionality and reporting. When using these systems, the budget numbers developed in your spreadsheet are manually inserted or imported into the budget fields of the accounting system.
If you are using a system that does not have budgeting functionality, you must export GL data into a database file. You then can use the reporting capabilities of your spreadsheet or a database program like Microsoft Access to create your budget variance reports.
Opening Photo ©iStockphoto.com/Rudyanto Wijaya
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add sales to your bottom line.
A free subscription to the #1 resource for the residential and commercial security industry will prove to be invaluable. Subscribe today!