4 Tips for Setting Your 2024 Budget
We're just a few days away from the fourth quarter of 2023. So with the business year winding down, it's the perfect time to start thinking about 2024. I know it can be tough to start thinking about the future when you are still VERY busy with the present, but doing this work now will set you up for a much more successful new year. Block some time on your calendar and get this process underway NOW with my top 4 tips. You'll thank me in 2024!
1. Review This Year
To decide what you need in 2024, you have to REALLY have a handle on what went right (and wrong) in 2023. Ask your bookkeeper or accountant to prepare documents for you to review that will show you exactly what you spent in each line item this year, and where most of your income came from. You also want to have a good understanding of what your profit margins are and where they can be improved. Know your cash flow and project how this year will end for you financially. Having those forms is going to help you start to project what you'll need for each category in your budget next year. You also should have some projects that will carry over into 2024, so start to add any payments from those into the income line of your budget.
2. Know Your Goals
Once you've started that draft budget, you have to do one very important thing before you go any further. You have got to know your goals for 2024. I don't mean every single goal, but at least your top priorities for what you want to achieve in those 12 months. For example, if your website needs an overhaul, that's got to be in the budget, and probably isn't something you had in your 2023 numbers. Or if you want to be sure you photograph as many projects as possible, you're definitely going to need more in the photography budget. The same goes for hiring new staff, expanding into a new office, or any other top-line goal.
3. Project and Prioritize
Now that you have a rough budget, start to project your income for the next year. Are things looking realistic? Or too pie-in-the-sky? That's ok! You can prioritize your financial goals and set aside the lower-ranking ones. They can be brought back into play if you are having a fabulous year filled with clients. Remember that a budget is just a working document. Nothing is set in stone. Having a prioritized list of goals will keep you on track and will remind you of what you want to accomplish in 2024. Mark the line items where you could also cut as necessary. Your budget should be able to contract or expand as you need it to.
4. Don't Back Burner These Two Things
There are two parts of a budget that people tend to put aside if they feel they need to cut. And that's a BIG mistake. One is marketing. You just can't acquire new clients without any sort of marketing. And I'm not just talking about social media posts. Put some money into your marketing budget, and KEEP it there. The second line item you never want to cut is your contingency fund. You might call it a rainy day fund or a savings fund. Whatever you call it, the key is to have money set aside for emergencies or unexpected events. You never know what's coming in 2024 (boy, did we learn that over the last couple of years), so be sure you protect your business!
To help you begin your 2024 budget process, download my FREE Third Quarter Business Goal Review and get started on that budget ASAP!