Forecasts and Budgets – Fixed vs. Rolling

5 Comments

A fixed budget covers a fixed period of time.  Once it’s set, you compare quarterly performance to the budget.  The year-end forecast tells you how much you can spend for the rest of the year.  If conditions change – a new competitor launches an advertising blitz or material costs drop suddenly – you’re stuck.  Either you don’t act and stay within budget, or you make the unforeseen expenditure and cut later on.

The rolling forecast looks five quarters ahead – through the following year, plus one quarter – and is updated each quarter.  On June 30, for example, you look at the remaining two quarters of the year and the next three quarters of the upcoming year (five quarters total).  Rolling accomplishes two things:

  1. Gets managers away from their year-end focus, and
  2. Allows for targets to move as conditions change.

This lets companies take advantage of unforeseen opportunities or shore up resources.  It also forces less detail – another positive.  The rolling budget then gets set based on the rolling forecast and additional resource allocation decisions.

Business planning is essential for business prosperity.  Businesses, like people, don’t plan to fail – they fail to plan.  If you would like to learn more about developing a rolling forecast & budgeting system from a biblical perspective or how a part-time, virtual CFO can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

Set Ethical Priorities

1 Comment

A few of the more common areas of business ethics violations are taxes, fraud, and misuse of company assets.

  • Taxes.  Nothing represents a businessperson’s spiritual values more clearly than that person’s attitude toward paying taxes.  Nobody likes to pay taxes, but to actually cheat on income taxes or any other tax is a sin, and sin separates us from God.  Unless you believe that your relationship with God is the most important asset you have in this world, sin can easily ensnare you.
  • Fraud.  Consistently, the most acceptable kind of fraud is practiced against insurance companies.  Take a look at your salespeople and sales practices.  Are you deceiving your customers?  Are customers being charged for service work that was never actually performed?  Clearly, God’s Word says that a deception will always be found out. (1) If a business can’t survive in total honesty, then it’s time to do something else.
  • Misuse of Company Property.  Business owners tend to believe they can treat company assets as their own personal property.  Some of the more common ways company property is misused:
    • Company Vehicles.  Most company-supplied vehicles are also used for personal purposes.
    • Telephone Use.  Many people don’t hesitate to make personal calls on the company telephone.
    • Copy Machines, Pens, Pencils, and Paper.

Business owners and managers need to set their guard against little acts of dishonesty, so that bigger ones won’t end up being a problem later. (2)

Business planning is essential for business prosperity.  Businesses, like people, don’t plan to fail – they fail to plan.  If you would like to learn more about business planning from a biblical perspective or how I can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) The honest person will live in safety, but the dishonest will be caught. Proverbs 10:9 (NCV)

(2) Don’t do as the wicked do, and don’t follow the path of evildoers. Proverbs 4:14 (NLT)

Set Priorities for Use of Time

2 Comments

Scripture doesn’t directly address the work week, but does seem to indicate that a six-day work week is not excessive. When you as a business owner or manager consistently adopts an excessively long work day that seldom provides for any relaxation or outside activities, you’re establishing an unwritten policy that the only way to get ahead is to work long hours. This puts your employees, and you, under great stress and eventually leads to decreased productivity. (1) This ultimately causes high turnover and necessitates higher salaries (increased costs) to entice new employees. Owners and business managers must understand that money is only a temporary motivator. A balance must be struck, for you and your employees, between Career, Financial, Spiritual, Physical, Intellectual, Family, and Social – your “Wheel of Life”. (2)

Business planning is essential for business prosperity. Businesses, like people, don’t plan to fail – they fail to plan. If you would like to learn more about business planning from a biblical perspective or how I can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) Know the state of your flocks, and put your heart into caring for your herds. Proverbs 27:23 (NLT)

(2) And everyone who competes for the prize is temperate in all things. Now they do it to obtain a perishable crown, but we for an imperishable crown. 1 Corinthians 9:25 (NKJV) (emphasis added)

Financial Priorities

1 Comment

Basically, this comes down to who gets paid first when cash gets tight.  Here’s how I believe Scripture instructs us to prioritize:

  • Priority 1:  Pay Suppliers.  Without a doubt, those who provide materials on credit have the first right to any available income from a business. (1) Since they have provided the materials, they have already invested their time and money, and they hold the position of highest honor, financial speaking. (2) If you know something you are doing is wrong and persist in it, God will not listen.   (3)
  • Priority 2:  Pay Employees.  Once the creditors are paid, the next priority is to pay the employees what is due them.  This is contrary to common business practice. (4) More often than not, the owner or manager of a business can better afford to lose a paycheck than the employees can.
  • Priority 3:  Meet owner’s needs.  Once you are sure that the creditors have been paid and the employees have received their due compensation, then the owner or manager should pay their portion.  The critical decision in this and other matters becomes whether to obey God’s Word or to adopt the common practices of society

Business planning is essential for business prosperity.  Businesses, like people, don’t plan to fail – they fail to plan.  If you would like to learn more about business planning from a biblical perspective or how I can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) The LORD detests lying lips, but he delights in those who tell the truth. Proverbs 12:22 (NLT)

(2) Do not withhold good [payment] from those to whom it is due, When it is in the power of your hand to do so. Proverbs 3:27 (NKJV) (emphasis added)

(3) If I regard iniquity in my heart,The Lord will not hear. Psalms 66:18 (NKJV)

(4) Let nothing be done through selfish ambition or conceit, but in lowliness of mind let each esteem others better than himself. Philippians 2:3 (NKJV)

Setting Priorities for the Use of Money

No Comments

Good planning must involve setting priorities and working on the most important ones first. (1) This is commonly called a budget or spending plan. Budgeting is essential for business prosperity (2) and to win in business, you must plan your money on paper, on purpose, before the month begins. Budgeting is like looking out the windshield (looking to the future), while using only the Profit & Loss statement is like looking at the rear-view mirror (looking at the past) while you’re driving. A budget is simply predicting the income and allocating available resources among the variety of possible, anticipated expenditures. The most common budget forecasting technique is simply using the past as an indicator of the future. Start with the same month last year or last month, add or subtract any new expectations, and the result is your prediction of the future. Every profit center within your company should prepare their own budget – and hold them accountable.

Business planning is essential for business prosperity. Businesses, like people, don’t plan to fail – they fail to plan. If you would like to learn more about business planning from a biblical perspective or how I can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) “For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it.” Luke 14:28 (NKJV)

(2) Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty. Proverbs 21:5 (NLT) (emphasis added)

Business Planning

3 Comments

Planning and goal setting are synonymous terms.  In order to do good planning you must first establish some realistic goals, both short-term and long-term, and in order to accomplish some realistic goals you must do some planning.  When considering business planning, begin by establishing the long-term goal or purpose for your business.  In reality there is one primary purpose for a Christian’s business:  to glorify God. (1)

In practice, glorifying God with your business functions like this:

  1. Fund the Gospel
  2. Meet Needs
  3. Be a Disciple
  4. Make a Profit

Once you’ve established the long-range goals for your business, the next step is to set specific, short-term operational goals.  We’ll break those down as follows:

  1. Setting Priorities for the Use of Money
  2. Financial Priorities
  3. Time Priorities
  4. Ethical Priorities

Business planning is essential for business prosperity.  Businesses, like people, don’t plan to fail – they fail to plan.  If you would like to learn more about business planning from a biblical perspective or how I can help transform your business using the Bible as our guide, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) Therefore, whether you eat or drink, or whatever you do, do all to the glory of God. 1 Corinthians 10:31(NKJV)