Budgets
It is critical that you have set budgets to work within. These will most likely be based on the figures you have included in your cashflow forecast.
It will be important that once the budgets are set you monitor your spend against them. If you find you are going over budget it may be necessary to try to change your spending to minimise the impact of this overspend and keep your profit at the same level. There are several ways to do this:
- Increase income, - you may decide to raise fees to counteract the overspend or you may need to increase the numbers of users to raise the income.
- Reduce spending in this area – if possible you may choose to restrict the spending in that area. If you find you have been spending lots of money on materials, you may either stop buying them for a period, negotiate a better price or look for a cheaper supplier
- Reduce spending in another area. It may be more appropriate to change the amount you are going to spend on another area. If you find you are overspending on staff wages and you can not cut this back you may choose not to spend so much on snacks to compensate.