And an important way to make the most of those opportunities is to build your business budget for 2019/20. 

Why? Because a well-planned budget will help you identify your profit goals and the revenue you need to achieve that profit. Understanding your budget will link into your strategic planning to ensure you are able to achieve your business goals. 

So, how do you build your business budget?

Here's four simple steps

Step 1: Net Profit

Decide how much profit you want to make in the next year. What are your goals and what profit will you need to achieve them?

Step 2: Direct Expenses

Direct expenses are the items that directly contribute to making or selling your product or service. Examples include wages, factory rent, cost of raw material. 

It's important to make sure you're paying yourself a salary. If you didn't include your salary when calculating your profit, go back and revise that now. 

Step 3: Operating Expenses

Operating expenses are the items that indirectly contribute to running your business. For example, car registration, phone and internet. 

Look at all your operating expenses. Small changes to business expenses can have a big impact on how much you are spending, so look at what is absolutely necessary and what is not. Can you reduce or get rid of anything?

Step 4: Target Revenue

To work out your target revenue that you need to achieve your profit goal, add your Net Profit, Direct and Operating Expenses together. This will give you your Target Revenue.

For example, to achieve a net profit of $100,000 when your direct expenses equal $250,000 and your operating expenses equal $175,000, your revenue for the year will need to be $525,000.

What next?

As mentioned, building your business budget links into your strategic planning. 

Break down your target revenue month by month (taking into consideration any seasonal adjustments). Based on your historical revenue, market conditions, etc is your revenue target realistic and achievable? 

What strategies do you have in place to help you achieve your revenue target? Do you need to review and update these? What support will you need to do all this?

If you need help building your business budget, or revising your business strategies, our team can assist. Contact your Johnsons MME adviser, or email contactus@jmme.com.au.