The end of another year is upon us. Are you ready?
As a franchise owner, this is the time you begin looking at your financial results so you can make some business decisions and prepare for the upcoming year.
One way to begin this planning process is through simple month-by-month budgeting for your franchise.
Here’s how you do it:
1. Ask your franchisor for a standard chart of accounts. Here, everything is accounted for the same way so you can make comparisons month after month, year after year.
2. When you close out your books at the end of this month, use your financial data to plan a budget for December. This data should be fairly reliable in terms of the revenue and expenses you can expect next month. Perhaps you’ll build in some projected revenue growth, but if nothing else, you can expect your numbers to be about the same.
3. Next, you use this data to plan a budget for the same month next year. In this case, you’d be planning ahead for November 2016.
4. As you move forward with this process, you’ll also want to look back at each prior month’s budget to make adjustments based on the actual revenue and expenses.
As you go through this process each month, make sure to take time to reflect on the trends you’re seeing. Why is revenue going up? What are we going to do differently next year to improve our results?
By taking time to consistently plan for both the next month – as well as the same month next year – you’ll be building what we call a trailing 12-month budget. In time, this will create a complete one-year plan you can use to make accurate projections and force improvements where they’re needed. It also gives you data you can bring to corporate to see how you compare to other franchisees in your area.
This simple process of budgeting for your franchise doesn’t take a lot of time, but the data it reveals can improve predictability and enhance the overall value of your business.
Remember: the franchisees who know their numbers make more money than those who don’t.