Many small business owners dread the time when they have to sit down and flesh out their budget for the upcoming year. Looking at the vast amount of expenses their business will incur over the year could leave owners to think: "How will I be able to turn a profit?" However, innovations in technology are giving small business owners more access to information and have made the financial forecasting process easier, which can give small business owners hope for the future.

Project cash flow

Although strategic plans primarily focus on more long-term objectives, it's still important to keep cash flow in mind when developing your approach. To do this, businesses can invest in cash flow forecasting tools that are designed to help users keep track of available funds in a convenient, organized and efficient way. These types of tools can predict the annual profits and additional funding requirements, should they be likely to arise. Cash flow forecasting tools can also help businesses identify their most and least profitable products, giving them a chance to readjust their budgets for the upcoming year.

Monitoring expenses

Small business owners often focus too much on the top line and make the mistake of overspending, putting their enterprise into debt while only realizing incremental increases in sales. In order to combat this potential problem, business leaders can invest in budgeting software that includes an expense-tracking tool designed to record expenses throughout the year. No more marking expenditures on a piece of paper that might get mistakenly tossed out, ripped or dirtied. 

Forecast your balance sheet

Far too many businesses underestimate the importance of forecasting their balance sheet. On the other hand, many businesses see value in this exercise but have a hard time implementing a balance sheet forecast. Fortunately budgeting software packages are available that make balance sheet forecasting much simpler. Forecasting only your income statement is not enough; when you ignore the balance sheet, you cannot accurately predict cashflow.  Having a balance sheet also allows you to model how financing and capital structure changes will affect profitability.

Forecasting future revenue

Unless business owners have a clear idea of how much revenue their company will generate over a certain period, they will be unable to responsibly determine how much they can spend to improve their business – new hires, technology, services, etc. In order  to have a realistic assessment of future revenue, business owners can develop a revenue projection model that looks at price, quantity and percentage changes that may occur in the foreseeable future. When forecasted revenue is based on the business events and rates that drive it, owners and managers are forced to critically think about their projections.  The result is more accurate forecasted revenues, and an assumption model that can be tested and revised over time.

Budgeting in the cloud

Many small businesses are looking for ways to make their processes more mobile to supplement a workforce that doesn't necessarily need to be in the office every day. Cloud budgeting solutions allow small businesses owners to allow their workforce to work on a budget from anywhere with an internet connection. Smartphones, tablets and laptops have made it easier for employees to remain productive while out of the office, which is why small businesses can benefit from managing their budgets in the cloud.

Focus on sustainability

A budget is more than just a piece of paper, or a spreadsheet, it is the cornerstone of a process that has the ability to help you better manage your business.  The opportunity to glean real insight from your budgeting process is lost if you only look at your budget once a year.  For this reason it’s best to build a budget that will fit into a sustainable process, where expectations are set, evaluated and refined over time. Business owners and managers who go overboard with the complexity of their budget are likely to feel overwhelmed, and as a result don’t realize the full benefits of budgeting as a management tool.

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