3 reasons your business needs a budget now
For many, the word ‘budget’ is about as appealing as the word ‘diet’.
It seems to imply what you will go without, rather than what you will achieve.
To a successful business owner, however, the word ‘budget’ has a very different meaning.
It’s more like a map than a diet. It’s an outline of where you want to take the business, and what you need to achieve to get there.
Running a business without a budget is like a ship’s captain setting off on a voyage without a map. Sounds ridiculous, doesn’t it. Who would do that?
Yet this is, figuratively speaking, what many business owners do.
Successful business owners, on the other hand, not only set clear targets and budgets each year, they monitor them closely each month, even each week, and adjust them as they go throughout the year.
Here are 3 compelling reasons your business needs a budget, now:
One:
If you don’t know where you’re going, how do you know you’re not already there?
If you’re not satisfied with how your business is performing, unless you set clear goals for where you want to take it, it’s probably as good as it is ever going to get. At best, it will just meander along, subject to the whims and vagaries of the economy and general market conditions.
The good news is that your business doesn’t need to meander along.
The first step in charting a clear course for growing and developing your business is objectively measuring ‘where it’s at’ right now.
And the numbers do tell a story.
For some, they act as a wake up call. For others, they just confirm the journey’s starting point.
It’s paradoxical that a large part of the value in a business budget is not in the numbers themselves. It’s in the realisation and acceptance of where you are and where you want to be.
The numbers are just the signposts for the journey.
A factual look at the numbers that describe where your business is right now takes away all the subjectivity, opinions and ‘reasons’ (often excuses, disguised as reasons).
This is the naked truth.
In fact, it is like standing on the scales, naked, looking at yourself in a full length mirror. That may or may not be a pretty sight!
For your business, these factual numbers are the sales, the variable costs, the margins, the overheads, and, lastly, the profit. After all your work, this is the reward you’re left with.
Then comes the first of a series of ‘hard questions’...
- Are you happy with that profit?
- Is it worth it? Or are you dissatisfied? Then ...
- What do you want those figures to look like?
Answer those questions, and you’ve just described where you want to be. Congratulations! You have charted your course, which is the first step to ensuring your success.
Two: What’s more important to treat? Symptoms or causes?
As you well know, sales don’t just happen. Costs don’t drop just because you want them to. Sales and costs are a result of other underlying factors. Put another way, they are symptoms of causes.
The business budgeting process quantifies the symptoms, and by asking a series of ‘What leads to this number?’ questions, it also identifies the underlying causes.
For example, underlying factors contributing to a sales (revenue) figure could include:
- the number of calls made,
- the number of customers walking through the door,
- the percentage of conversions of enquiries or walk-ins to sales, the dollar value of the average transaction, or simply
- where your marketing is targeted.
These are all called drivers. The sales figures are simply a result of these drivers. Costs are no different.
For example, the rent paid may be a result of the storage you need for your stock levels. Wages costs may be blowing out as a result of overtime paid but underlying that may be inefficient staff. Or a lack of clear processes. Or both.
So in reality what came first was not the sale or the cost, but their underlying drivers. The budgeting process forces you to name and to quantify these underlying drivers.
That’s one of the most valuable aspects of preparing your budget. Not the budget itself, per se, but identifying your business’ drivers.
Why?
Because then you can focus on improving them.
That’s what will produce the improved results in your business. No focusing on last quarter’s figures. That’s history.
It’s more fun to create history. And that is, in essence, what you are doing when you are in your own business. You are captain of your own destiny, and you can steer it in any direction you want.
Note that word ... direction. A key point is to have one.
You will enjoy how effectively the budgeting and planning process will get you crystal clear on your direction.
Three: Budgeting is not about accounting. It’s about being accountable.
Once you are clear on the handful of drivers that creates your business’ results, the next question is…
What are you going to do about it?
Your budget won’t just give you a monthly sales target, for example, it will help you quantify the drivers that will produce the result.
For example, if next month’s sales target is $120,000, that end-result figure is not your focus. Not on a day-to-day basis. Knowing the underlying drivers, your focus will instead become, for example:
25 calls per day (Driver No.1)
At 80% conversion rate (Driver No.2), with
Each customer buying an average of $300 worth of products (Driver No. 3).
Now you and your staff have a clear focus and are 100% accountable.
That’s good for them, and good for you and your business.
People in a business want a clear scoreboard and a ‘game to play’ so they know whether or not they are winning. Research has found that a lack of measurement in a job is demotivating to a staff member. Patrick Lencioni’s book ‘3 Signs of a Miserable Job’ gives some great examples of this.
Knowing these drivers, and quantifying a target for each you can then ask questions like:
- Have the 25 calls been made today?
- If not, why not? Is the target realistic?
- Does the team need training?
- Do they need better telephone equipment or dialing software?
- Or just more focus?
- Or guidance on what their task priorities should be?
- Or a combination of these?
- Are we being effective and converting 80% of the calls?
- Again, if not, why not?
You can then decide to improve skills, or systems, or attitude, or all three!
As you can see, the power of the budget is in the process of preparing it, and then the budget itself is a tool to hold you accountable to the measurable indicators you’ve chosen.
An added layer of accountability is... us.
We work with a number of clients where, on either a monthly or quarterly basis, we act as a sounding board and independent party to ask you the hard questions about the drivers and the results. This focuses your mind, allows you to form a clear Action Plan to improve results, and then increases your chances of success because you know you need to report in to us next time.
It’s a powerful process that you’ll enjoy due to the focus it creates and, in turn, the results that focus achieves in your business.
To take more control of your business and its performance, get in touch to make a time to come in and see us. Depending on the size of your business, we might work out that a quarterly process might work best (and be the most feasible, cost-wise), or your business might be at a point where monthly or even weekly guidance would be ideal.
Either way, we’ll outline your options and your costs so you know precisely what’s involved.
We look forward to helping you chart your course, helping to get a clear direction, and then keeping you and your business on course.
After all, you won’t end up at the ideal destination by drifting.
Need help with your accounting?
When you're looking for ways to save money, it's easy to focus on the big expenses. But sometimes the easiest savings are sitting in the things you pay for every month without really thinking about them. Subscriptions, unused services and small recurring expenses can quietly add up over time. Here are five simple things worth checking. 1. Audit Your Subscriptions Start by looking at all the subscriptions you're currently paying for. Go through your Apple App Store or Google Play Store accounts and check what you're being charged for each month. You may find subscriptions you've forgotten about, apps you no longer use or services that are automatically renewing. Even a few dollars here and there can add up to a significant annual expense. 2. Cancel Services You Don't Use If you've paid for a service that you haven't used in the past month, ask yourself whether you really need it. Unused streaming services, apps, memberships and other recurring payments can continue taking money from your account long after you've stopped using them. Cancelling an unnecessary subscription is one of the easiest ways to stop the leakage. 3. Negotiate Better Deals If you've been with the same provider for a long time, don't assume you're already getting the best deal. It may be worth contacting your provider and asking whether there is a better plan or rate available. This could apply to a range of services where you're a long-term customer. A few minutes spent asking the question could result in ongoing savings. 4. Set Reminders for Renewals Free trials and annual subscriptions can be easy to forget about. Set a reminder for when a free trial ends or when a subscription is due to renew. That gives you the opportunity to decide whether you still want the service before you're charged again. Your calendar or phone can prompt you. 5. Track Your Spending Small expenses are easy to overlook when they're spread across multiple accounts and services. Using a budgeting app or regularly reviewing your transactions can help identify areas where you're spending more than you realise. You may discover recurring payments or habits that no longer represent good value. Small Changes Can Add Up Saving money doesn't always require a major lifestyle change. Sometimes it's simply about paying attention to where your money is going and cutting expenses you no longer need. The article provided makes the same point: regularly reviewing subscriptions and cutting back on unnecessary expenses can help build a stronger financial foundation. saving costs things to look at At Ascent Accountants, we can help you look at the bigger picture of your finances and identify opportunities to make your money work harder for you.
Finding a caveat on a property you're looking to buy can be an unwelcome surprise. A caveat can prevent certain dealings with a property from being registered, which can delay a sale or prevent a purchaser from settling until the issue has been dealt with. It can also create problems with finance because lenders generally require clear title. First, What Is a Caveat? A caveat is a legal notice recorded against a property. Importantly, a caveat may only be lodged by a person or entity with a legal or equitable proprietary interest in the land. It effectively acts as a statutory injunction, preventing the Registrar of Titles from registering certain dealings with the property, such as transfers, mortgages or leases, unless the caveat is withdrawn, removed by court order or otherwise lapses. caveat on properties Why Might a Caveat Be Lodged? There are several reasons why a caveat may be placed on a property. These can include securing a debt owed by the borrower, protecting a buyer's equitable interest in land under a contract of sale, or protecting an unregistered or equitable mortgage. A caveat can therefore indicate that another party has an interest in the property that needs to be resolved. How Can a Caveat Affect a Property Purchase? If you're buying a property with a caveat on the title, it can complicate the transaction. For example, the sale may be delayed or prevented from proceeding until the caveat has been dealt with. It can also affect finance. Lenders generally require clear title, so an unresolved caveat may make it difficult to obtain or finalise finance. What Should You Look Out For? If a caveat appears on a property, you're considering buying, don't simply assume it will disappear before settlement. Find out: Why the caveat has been lodged. Who has lodged it. What interest the caveator is claiming. Whether the caveat needs to be withdrawn or formally removed. Whether it could affect your ability to settle or obtain finance. The type of caveat matters too. The source material identifies different types, including absolute caveats, subject-to-claim caveats, caveats lodged after notice, improper dealing with caveats and registered proprietor's caveats. caveat on properties How Is a Caveat Removed? There are several possible ways of dealing with a caveat, depending on the circumstances. These can include withdrawal by the caveator, statutory removal or court resolution. A withdrawal generally needs to be signed by the caveator and lodged electronically where required. There is also a process for applying for removal under section 138B of the Transfer of Land Act 1893. caveat on properties The caveator has 21 days after being served with the relevant notice to act, although the Supreme Court may order an extension in some circumstances. Don't Let a Caveat Catch You by Surprise If you're buying or selling property, understanding what is recorded on the title is an important part of the process. An unexpected caveat doesn't necessarily mean a property deal can't proceed, but it does mean there is an issue that needs to be understood and dealt with. At Ascent Property Co, we can help you understand the financial implications of a property transaction and work alongside your legal advisers to help you make informed decisions.
Are you using the logbook method to claim car expenses? The ATO has been increasing its audit focus on car expense claims, with particular attention being paid to both whether logbooks meet the requirements, and if the business-use percentage has been calculated correctly. Here are eight common areas that could cause potential issues with your claim. 1. Keeping a logbook in the wrong income year A valid logbook must be kept in the first income year in which you use the logbook method to claim car expenses. After that, a new logbook is generally required every five years. If you're not sure whether your current logbook is still valid, it's worth checking before relying on it for your tax return. 2. Not keeping the logbook for the full 12 weeks A valid logbook needs to cover a continuous period of at least 12 weeks. The 12-week period can cross from one income year into another, provided it includes part of the relevant income year. 3. Choosing your busiest 12 weeks It can be tempting to choose a 12-week period when you were doing more business driving than usual. But the business-use percentage from a 12-week logbook isn't automatically the percentage you can apply for the entire year. Your calculation needs to consider variations in how the car was used throughout the year. 4. Forgetting about a replacement car If you replace your car during the income year, you can't simply transfer your existing logbook to the new vehicle due to changes in usage. If you want to rely on the existing logbook for the replacement car, there are nomination requirements that need to be met. Otherwise, a new logbook may be required. 5. Writing vague descriptions of business trips The details matter. A logbook needs to record the relevant details of each business journey, including the dates, odometer readings, kilometres travelled and the purpose of the journey. Entries such as "business trip", "client visit" or "customer visit" may not be enough . The description should explain why the journey was made. 6. Reconstructing your logbook later Your logbook should be kept as you make the journeys, or as soon as possible afterwards. Inconsistent entries, duplicated dates, identical odometer readings or records that don't line up with other information can raise questions about whether the logbook was reconstructed from memory. 7. Getting business and private kilometres wrong Your business-use percentage needs to be based on a reasonable estimate of your business kilometres for the year. That means considering changes in your work, holidays, leave, changes in employment duties, changes in your work location and other variations in how the vehicle was used. 8. Forgetting your odometer records and receipts A logbook is only part of the record-keeping requirements. You also need odometer records for the relevant period, and car expenses such as registration, insurance and servicing generally need to be supported by appropriate records. What Should You Do? If you use the logbook method, don't assume that having a 12-week logbook automatically makes your claim correct and compliant. The ATO's increased scrutiny means it's important to make sure your logbook is valid, your entries are accurate and your business-use percentage reflects how the vehicle was used throughout the year. At Ascent Accountants, we can help you review your car expense records and make sure your logbook and business-use calculation meet the requirements before you claim.
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A new way to claim work-related expenses is coming for the 2027 tax return — but there is an important catch. From 1 July 2026, eligible taxpayers can claim a standard deduction of up to $1,000 for certain work-related expenses, without having to substantiate each expense individually. Sounds simple enough. But before you assume you can claim $1,000 on top of everything else, there are a few things you need to know. The $1,000 Is the Maximum The new standard deduction is capped at $1,000. It is designed to cover certain common work-related expenses, such as work-related phone and internet, home office expenses, stationery and some travel expenses. You can't claim the $1,000 and then claim those same expenses again separately. If you have actual work-related expenses of more than $1,000, you can continue to claim your actual expenses under the existing rules, provided you meet the requirements and have the records to support them. Do I Still Need to Keep My Receipts? Yes: and this is where it is worth being organised. If you use the standard deduction, you don't need to substantiate the individual expenses covered by it. But if you think your actual work-related expenses could be more than $1,000, keeping your receipts and records throughout the year will allow you to claim your actual expenses instead. There are also some deductions that aren't covered by the standard deduction and can still be claimed separately if you are eligible. It's for Your 2027 Tax Return The new deduction applies from the 2026–27 financial year, so you won't use it for the tax return you are preparing now. It will first apply to your 2027 tax return, lodged from July 2027. Is the $1,000 a $1,000 Tax Refund? No. The $1,000 is a deduction from your taxable income. It doesn't mean you'll receive an extra $1,000 back from the ATO. The value of the deduction will depend on your individual tax circumstances. What Should You Do Now? The best thing you can do is keep track of your work-related expenses throughout the 2026–27 financial year. When it comes time to prepare your 2027 tax return, we can look at your circumstances and determine whether the standard deduction or claiming your actual expenses is likely to give you the better outcome. At Ascent Accountants, we can help you make sense of the new rules and make sure you're claiming the deductions you're entitled to: without claiming the same expense twice!
