September 12, 2016 2:56 PM by khilton
September may seem like a strange time to talk about budgeting for your business, but actually, any time of year is a good time to review how your business is tracking against your projections. Whether it’s planning for next year, or comparing this year’s results to what you were planning, looking at your actual numbers compared to your business plan for the year should be something that happens on a regular basis.
To illustrate, I’ll use a couple Red Wing Software examples of why this is important. Each manager of their respective department is responsible for creating their budget for the coming year. Of course, not only expenses are projected, but revenue is also part of the budget. For example, each salesperson puts together the sales goals that they expect to achieve on a monthly basis, and how they expect to achieve those goals. Sales numbers are then measured throughout the year on a daily basis so we are aware of how we are performing compared to our projections. If sales numbers are not what we expected, (either lower or higher), it is important to know the reasons and react quickly to any discrepancy. Of course if sales numbers are higher than we expected, we want to know why, and keep making decisions that ensure continued success.
On the expense side, you obviously want to make sure you are not spending money that was not budgeted without a serious look as to why these expenses were increased. Also, and this may sound strange at first, you want to make sure you are spending all the money that is budgeted unless there is a good reason for not spending it. For instance, our Marketing Manager budgets to spend a certain amount on very specific items. Whether it’s advertising, trade shows, web presence, travel, or any number of other things, it is important to stick to this plan. If marketing dollars are not spent as planned, the result could very well be a decrease in revenue. It can be a delicate balancing act.
We are fortunate at Red Wing Software to have seasoned, experienced managers and staff that are very good at planning for their respective departments, and our revenue and expense numbers are typically within two percent of their projections. I believe with practice, discipline, and timely analysis, most businesses can be equally accurate in their planning process.
This month, I want to share some observances made on a recent business trip. First, it’s a long drive from Red Wing, MN to Sheridan, WY, but the landscape and sites along the way are something everyone should experience at some point, and the destination is breathtaking.
Several speakers shared their experiences on how their businesses are structured and how they use financial information to manage decision-making processes in their operations. It was refreshing to see so many Red Wing Software users, and users of other software, take advantage of the capabilities in their choice of products to really analyze their situation and make sound decisions to improve profitability.
It was clear our hosts for the meeting held everyone that worked at the company to a very high standard, and likewise treated everyone in the organization like family. We should all strive to live up to the standards that were exhibited by their management team.
Finally, as part of the meeting, we attended a rodeo. When I see the physical condition that these cowboys and cowgirls must be in to execute their chosen profession, and the danger they put themselves in, it makes me feel fortunate to be in the software business. About the only time someone at Red Wing Software gets hurt is if they slip on the ice between their car and the office.
I want to congratulate Chad in our sales department on the arrival of their newest addition to their family. A beautiful baby girl.
With the relatively recent heavy rain storms and flooding in the southern and eastern United States, and the wildfires in the west, it is a reminder of how important it is to be prepared for a disaster. I sincerely hope all of our customers are getting through the unexpected events and/or recovering from the effects safely.
I have previously mentioned the importance of having your business information protected by storing data backups off-site and in places the data would be available to restore if the need arises. In the event of a disaster, Red Wing Software will do everything we can to help get your business back up and running by helping reload programs, etc., but we can’t help recover your financial information if you don’t have access to a good backup. Please don’t hesitate to call on us when you need disaster recovery assistance. One way to eliminate worrying about storing data backups off-site is to use the Red Wing Cloud Service which gives you access to your CenterPoint program and financial information in the cloud so it can be accessed anytime from anywhere.
I’ve heard the recent “Brexit” vote described as an “Independence Day”. As we enjoy Independence Day in the United States, and Canada Day in Canada, we wish the best of outcomes for our friends and allies in Europe. Please celebrate safely.
This month I had a number of topics for this newsletter floating around in my head, but, after this weekend, only one seemed important.
On behalf of myself and the entire staff at Red Wing Software, I have a short and sincere message to all the men and women who have served, do serve, or will serve their country in the defense of freedom: Thank You.
Mark, our New Business Development Manager, was talking to me the other day about a customer that had stopped using our software in favor of another company’s software. It seems this customer was in need of some new functionality, so he started looking for software that had those capabilities. He found new software, made the switch, and proceeded to set up and re-enter a lot of the data that had already been entered into the Red Wing Software product.
As you can imagine, starting over with new software is a very large task. Once he got started, he discovered he was missing much of the functionality he was taking advantage of in the Red Wing Software product previously used. So, he called Mark and wondered what it would take to move back to Red Wing Software, and mentioned the reason for the original switch. Mark explained that the functionality he was looking for was actually already available in the Red Wing Software product, and could have easily been implemented with a quick call to our staff.
This is just one example of a case when it is a good idea to talk to your current supplier when you are looking for something that is related to a product you are using and already comfortable with. This happens to be a software example, but it could apply to almost any product or service. Keep in mind you have been working with this supplier for some time, likely trust their opinion, and if what you are looking for is not available, your current supplier might be able to help you find a solution.