Don’t get me wrong, I’m neither a fan of Financial planning nor accounting, and there isn’t really a reason to do this first aside from the fact that it is the end of the year, and I’d like to follow a similar thought process for my own personal “Budget” in 2025.
1. Set Revenue Guidance and Target (Sales Budget)
- Sales (preferably grounds up) to review opportunities and pipeline to hit figure
- Current view is having opportunities,
2. Understand Key Enablers (Sales and Marketing)
- Consider what are needed to achieve the target
- Manpower
- Marketing (especially exhibitions, campaigns, advertisements, promotions)
- Travel, transport, entertainment
3. General and Admin (OPEX)
- General management Manpower
- General expenses
- Travel, transport, etc
4. Product (OPEX)
- Split by each respective Project team
- Consumables
- Services
Note that some product development expenses can be capitalised, but I have found masking such costs are not tenable in the long term, from a “purists” view of P&L.
5. CAPEX
- Split by each Department
- Feeds into the Fixed Asset register
Combined, this is sufficient to produce a P&L, Balance Sheet and Cash Summary