GIP15 Budgeting for Landscape Business Owners in our Series on Finance

Business Growth Radio - Solutions on Demand

The last Green Industry Pros podcast (GIP14) covered Accounting & Invoicing with a reference to ABC or Activity Based Costing. Putting together an effective budget doesn’t require ABC but sure helps. We start this discussion with the types of budgets available to a landscape business owner and then focus on where to start. One last thought, a budget has two demands to be effective: accuracy and forecasting. Types of Budgeting Systems. Traditional: created for a period and uses the previous year as a starting point.Zero-based: every year starts from scratch. Last year provides insights but instead you start at zero.Flexible: ongoing adjustments based on sales forecasts and the impact on production projections.Rolling: it takes a year long view and at the end of every period (a month or quarter) it is dropped and a new month or quarter is added to maintain a 12 month budget. Start with either the Traditional or Zero-based System, then as your competence and confidence increases move to Flexible and Rolling Budgets. Now the question moves from the system to its use. This is a quick overview, and we choose the choices most appropriate for small landscape companies. Your Options: Master budget, Operating budget, Financial budget, Cash budget, Labor budget, Capital budget, and Strategic. Our recommendation is to start with the operational budget and then add the cash budget.