Starting a new fiscal year soon? No matter if you’re operating a business, non-profit, religious institution, or organization, a clear budget is really important. Effectively preparing for a new fiscal year is a key task for your organization to ensure smooth operations and hopefully financial success. Here are 8 key steps for your organization as you budget for the new fiscal year:

1. Analyze last year’s financial performance

It’s report card time! Before beginning a new fiscal year, it’s important to take a look at last year’s financial performance and see how you did, including reaching your goals. Some of this analysis could be taking a look at financial statements like cash flow, income, or balance sheets to see if you can identify any distinct patterns or trends. Pinpointing any clear areas that need improvement or areas that did very well is also a perk. Use all of this information to start creating your budget!

2. Set SMART financial and business goals

After you take some time assessing last year’s budget, it’s time to set some goals. You might already know about SMART goals: goals that are specific, measurable, achievable, realistic, and timely. Every fiscal year or quarter, it’s always a good idea to check up on your goals to see how to then set an appropriate budget. Oftentimes, organizations need to ask: “Do my business goals match up with my financial goals?” A new fiscal year is a perfect opportunity to step back for a second and answer some questions.

3. Review budgeting systems and processes

Before you begin budgeting, it’s also a great time to look at how you create and maintain your budget. Did you use manual spreadsheets and just email them to each other last year? Did you draw your budget plan on a whiteboard and take a photo of it on your iPhone? However you like to brainstorm is wonderful – but make sure it’s still the right process. As your company grows, your budget gets bigger and a bit more complicated, so a robust or collaborative Cloud-based budgeting software might be a good fit for you now.

4. Assess revenue projects, market conditions, and prepare contingency plans

There are tons of factors to consider before creating a budget, and they can be internal or external forces. Calculate revenue or sales projections based on last year’s performance and your current climate to set expectations. You also need to take a look at the outside factors that could have a significant impact on your organization, such as the economy, market conditions, your competition, or industry trends. There should be a healthy balance between being conservative, realistic, or “safe” with your budget allocation and projecting positive growth. It’s always smart to set some contingency plans in place if anything were to swing a different way as well. 

5. Create a detailed and realistic budget

If you’re a budgeting professional, you likely know the gist. However, a lot of small organizations do a lot of their own budgeting and learn as they go. However skilled you are in budgeting, it’s essential for all budget managers to create a plan that is extremely thorough, realistic, and flexible. Create a comprehensive budget that includes all projected revenue or expenses, as well as every single faction of your business such as capital expenditures, marketing or sales, and general operations.

To be realistic is to also prioritize, track and prepare for your expenses so there are few financial surprises like an increase in rent, taxes, equipment, supplies, or salaries. Setting aside a safety net or reserve fund as a form of contingency is never a bad idea either, especially in cases of emergency. Overall, create a clear and realistic budget that is right for your organization in this new fiscal year, but be open to adjustments as needed.

6. Present budgeting plan to relevant leadership and department heads

It’s never a bad idea to get input from everyone who might be affected by budget allocation, especially the heads of each individual department within your organization. Showing your budget plan to both the leadership and your team gives you many sets of eyes. They all might have valuable and “on-the-ground” insight that you would love to hear. Once leadership approves your budget and everyone is on the same page, you can move on to implement it. 

7. Develop and train your employees

Hooray! Your budget is approved, and it’s time to loop everyone in on your financial goals and budget for this year. Communication and collaboration can really keep your team focused on your goals, and employees will feel empowered to do their work to meet those goals. With the new fiscal year, provide training and development opportunities, so your team is equipped to do so. This may involve teaching them how to operate a new budgeting or reporting system or allowing everyone some time to brush up on some educational topics.

8. Constantly review and update your budget

As the fiscal year progresses, make sure you can properly track the budget you have created. It’s important to establish a budgeting system or software that can show you how you’re doing and meeting those financial goals. Your team should frequently compare actuals to projections and then make corrections as need be. Adjusting a budget does not mean the original budget was a failure – it means that you were prepared to evolve and stay quick on your feet. That is why we always encourage realistic budgets, contingency plans, and staying open to real-time tweaks. The beautiful thing about flexible and adjustable budgeting systems is you can constantly update where you need to all year long.

Following these steps can really help your organization stay on track with its budgeting at the start of a new fiscal or financial year. It never hurts to be prepared, and the right budgeting software can help you thrive and meet your goals as well. We may have one that’s the right fit!

Martus is a Cloud-based budgeting, forecasting, and reporting software tool that allows organizations and businesses to create, execute, and analyze budgets with ease. Martus supports collaboration, is easy to implement, and is very affordable! We created our Budgeting & Reporting Software to make budgeting much more streamlined for you, making it so your non-profit, school, church, business, or organization can operate how they need to.

For more about Martus, learn about what we do here or contact us for a free demo today!