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Using your Budget Effectively |  August 30, 2017 (0 comments)

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Omaha, NE--It is imperative to set a company budget and use it as a tool to drive your business forward.

A good budget is like a speedometer on a car. Let’s say you are going out for a drive one day and you need to get to a town 200 miles away. You leave at 9:00 am and know that you need to get there by 1:00 pm. To achieve this you will need to travel at somewhere around 50 miles per hour for the entire journey. Comparing this to your business performance your “destination” would be to say you want to achieve sales of $1 million dollars. Setting the time frame for your journey is like saying you want to achieve this goal over the coming 12 months.

Now imagine you start your journey and discover your speedometer isn’t working--and what’s more, there is no signage along the way telling you how much further it is to your destination or how far you have come. Frustrating, isn’t it? You don’t know whether you are ahead, behind or on time to reach your destination by 1:00 pm. You know how much time there is left but don’t know how far you have to go. The likelihood of achieving your destination in the required timeframe has now become that much harder to achieve and is largely left to guesswork.

From a business perspective, if you prepare financial information for your business monthly or quarterly this will give you some idea on how you are going relative to your financial destination. But like your car speedometer, it can be hard to know whether you are on track during the periods between the reports. Financial information is mostly historical and untimely – a bit like that road side sign you saw 10 minutes ago that said you still have 120 miles to go.

But again, without your speedometer you won’t be able to work out how you are going until you see the next sign. An effective budget (or Sales Plan as we prefer to call it) can help provide timely, relevant information as you need it – on a daily basis. This is the equivalent of your speedometer telling you right here and now whether you are ahead or behind on your speed. A good Sales Plan allows you to measure your business daily so you know whether you need to put your foot on the gas or not.

If you haven’t done so yet, break your budget (Sales Plan) down into daily targets across each department and monitor it every day during the year. The time to take action to rectify your budget if you are falling behind is after the first few days of the month, not when the month is over. Use your speedometer, and don’t just wait for that next roadside sign to come along.

The Edge Retail Academy is a highly effective jewelry industry consulting company that provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and the unique talent pool of their business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. www.edgeretailacademy.com

David Brown is a native New Zealander who in three years tripled sales and net profit in a jewelry store he bought in Australia. He is an expert in the areas of inventory management, sales growth strategies, retail systems and staff management and, with the development of powerful industry- specific software, Brown can supply business owners with information and strategies to significantly improve sales, profit margins, control, and ultimately peace of mind. To reach Brown, call (877) 569-8657 or email inquiries@edgeretailacademy.com

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