One of the most sensitive issues related to management is, without a doubt, money. In this sense, the application of budget is an essential task for the planning and control of the company’s activities, aiming at better decision-making.
Before delving into the topic, it is important to understand that budgeting means calculating the cost of a particular product or service in order to estimate the best price. This tool can be useful on many occasions, making a difference for many entrepreneurs and managers.
However, there are different types of business budget used in the market. Among them is the dynamic budget – which can be adjusted according to potential needs. To learn about its concept and how to prepare and apply this type of financial assessment in your business, read on!
The dynamic budget – also known as flexible budget – analyzes variable costs more freely. That is, budget resources are not fixed based on a predetermined estimate and can be adjusted if the amount of actual activity changes compared to the estimate.
Therefore, when doing the dynamic budget, there is greater flexibility to move the structures according to the organization’s needs and goals.
However, it is important to keep in mind that, in order to prepare this budget efficiently, managers should have a clear distinction between expenses and costs. In this case, costs will be “flexible”, while expenses are static.
The static budget is one of the budget models most used by Brazilian companies. In it, all budget items, such as revenues, costs, expenses and investments, are determined by setting a production or sales volume that establishes the amount of other activities of the organization.
Since this volume is fixed, no changes are allowed, even if, during the execution of activities, there is some variation in demand, productivity, or results.
On the other hand, the dynamic budget allows the modification of resources made available based on the variation in results. In other words, if the production volume increases, a proportional increase in budgets such as raw materials, taxes, commissions etc., is allowed.
Before learning about the pros and cons of flexible budget, it is important to keep in mind that each company and each case may require a different budgeting model. Read on!
When creating a dynamic budget, it is necessary to have a master cost estimate already prepared and to understand the behavior of expenses – which means making a perfect distinction between fixed, variable, and semi-variable costs.
It is also necessary to identify the actual volume of items produced and sold and estimate the planned revenue in order to determine how much cash will be on hand.
Then, this financial assessment has to be compared with previous records of expenses, costs, and revenues to determine the relevance of the dynamic budget. In addition, it is important to re-evaluate it periodically.
HERE IS A PRACTICAL EXAMPLE
The WYZ Company wants to prepare a dynamic budget to make monthly comparisons between the actual and the budgeted volume. The organization is projecting the following costs:
| Variable Costs $ | Fixed Costs/Month $ | ||
| Indirect materials | 1,10 | Depreciation | 12,000 |
| Indirect labor | 1,50 | Supervision | 8,000 |
| Commissions | 0,80 | Maintenance | 40,000 |
It wants to project its costs for various activity levels, reaching the initial volumes of 9,000 and 11,000 units/month for products A and B.
| Products | A | B | Total | |
| Sales/Unit | 9,000 | 11,000 | 20,000 | |
| Variable costs | ||||
| Indirect materials | 1,10 | 9,900.00 | 12,100.00 | 22,000.00 |
| Indirect labor | 1,50 | 13,500.00 | 16,500.00 | 30,000.00 |
| Commissions | 0,80 | 7,200.00 | 8,800.00 | 16,000.00 |
| Total V.C. | 30,600.00 | 37,400.00 | 68,000.00 | |
| Fixed costs | ||||
| Depreciation | 6,000.00 | 2,700.00 | 3,300.00 | 6,000.00 |
| Supervision | 5,000.00 | 2,000.00 | 3,000.00 | 5,000.00 |
| Maintenance | 20,000.00 | 9,000.00 | 11,000.00 | 20,000.00 |
| Total F.C. | 31,000.00 | 9,000.00 | 11,000.00 | 20,000.00 |
| Total costs | 39,600.00 | 48,400.00 | 88,000.00 |
Therefore, applying the dynamic budget can greatly facilitate the organization’s operation. Even with a certain degree of complexity, it is a great tool for the success of the budget process.
LEARN HOW TO APPLY THE DYNAMIC BUDGET
Applying the dynamic budget is a very important point, as this step is essential for the good management of the company. For example, in a cost estimate where there is a great amount of data – which increases the complexity of operations – it is interesting to develop strategies that optimize this process.
To this end, it is important to create a budget plan to obtain the projection of revenues, costs, inventories, and investments estimated in the coming years. However, before carrying out this task, you need to know your business well. This is because companies have different needs, so each plan must be adapted to the reality of your organization.
It is also important to know that this activity is not guesswork. All conclusions must be accurate and made based on the data collected, such as the business’s budget history.
Currently, there are many methods that help in the company’s budget process and financial management, such as cash flow. There are also different software aimed at controlling costs and profitability. They help in the collection, storage, and processing of data, and provide dynamism and versatility to the budget analysis of your company.
If you want to know some of these solutions, we at MyABCM work with these systems. They are aimed both at advanced implementations and simpler management.
Now that you understand the use of dynamic budget in the company and know how to apply it, be sure to have the technology to make this process easier. With it, your organization is able to optimize processes, increasing productivity, reducing costs, and improving your results. That way, it is possible to gain prominence in the market and a competitive advantage.
Was this content helpful? To improve the financial management in your business, also check out our article with 8 tips to make a perfect cash flow!
Without a doubt, anyone who opens a company wants to have a profitable and lucrative business. The count to make this happen is not complicated: a successful venture has more profit with less investment, and most of the amount of a product sold stays with the company.
To know for sure if your business is profitable, the first step is to understand what is the difference between profitability and rate of return. The two terms are usually mixed.
The first is a measure used to indicate how much a company has actually earned in relation to all products sold in a given period. The second is related to the initial investment and the return that this investment can provide to the business.
To calculate a business’s rate of return, you need to find the net profit in order to relate it to certain investment. Thus, the formula for its calculation is as follows: (net profit / investment) x 100.
Although they are different concepts, profitability and rate of return have a direct relationship when evaluating the health of a business.
Keep reading and check out 4 tips to identify if your business is profitable:
Gross turnover is all the money that goes into the your company’s cash before you use it for paying bills, employees, taxes and the like, while the net turnover is the remaining amount after paying such expenses.
Here, we find one of the most important steps to identify whether your company is profitable or not. Operating costs are those that need to exist for the business to operate, and are classified as having no income expectancy.
For example, operating costs are rent, electricity, water, telephone, etc. You should have all of these values listed, preferably in the same place where you recorded your company’s gross and net turnovers.
In addition to operating costs, it’s important to note what are your company’s fixed and variable costs.
Fixed costs are those constant expenses that don’t vary according to the business’s turnover, whereas variable costs may be larger or smaller depending on the production or sales of a given month.
Once you gather all the necessary information and calculate the rate of return, you may want more income. At that point, the best way to find out if there really is room for that is to compare your company’s rate of return with that of the market, paying attention to your competitors and studying the results of other companies.
Of course, the numbers will depend on your business’s industry. We know that, as a rule, the service sector has a higher rate of return than small businesses or the retail sector. On the other hand, historically we see that the rate of return of companies has been decreasing dramatically due to several factors: increased competition, increasingly demanding customers, government pressures, taxes and more.
This can be a laborious process, but it is important to know the health of your business. Currently there are software programs that make it easier to calculate and assess the rate of return of a business, integrating all the information in one place and optimizing the process.
Now that you know how to determine a profitable business, follow us on social media and get notifications of articles like this one. Find us at Facebook, Twitter, LinkedIn and Google Plus.
Do you know what the real relevance of a balance sheet is? Among all your accounting reports, they’re considered the most important. However, many business leaders still neglect them.
You can use this report to help the financial management of your company and verify your assets, rights, liabilities, third party capital, profit reserves, and sources of income.
Interested in this subject? Want to get a better understanding of the importance of balance sheets? Then this article is for you. Take a look!
It’s a formal accounting statement of all of your company’s financial transactions for a given period. Thus, all of the accounting rows detailing credits and debits are those that appear in an organization’s accounting ledger.
Through this statement you can determine the balance of your assets, rights and liabilities. You can also identify all your sources of income from any accounting entity.
Therefore, the balance sheet and income statement are considered indispensable to the financial planning for any company.
Every balance sheet is structured based on a chart of accounts, which is defined when a company begins its activities. Every balance sheet needs to consist of three accounting categories which are as follows:
It’s a good idea to use a brief balance sheet each month to verify whether all the transactions listed in the accounting ledger are correct.
When you have many alterations of value, it’s possible that one or more income or expense items have been left out of your ledger, or that the total of assets or liabilities has been listed incorrectly.
Due to this limitation, you always need to make adjustments to your accounts so that they are in keeping with reality, and the total of these alterations in terms of assets and liabilities have to be equal.
Yes. We should consider the balance sheet an analysis tool for any business, because it shows the overall situation of its accounts. It supplies managers with financial data that will help them drive their company’s profitability and rate of return on investment. Take a look!
Whenever the assets of your business are greater than your liabilities, we are talking about positive net worth. When the assets and liabilities are equal this indicates zero net worth. In the same way, when your liabilities are greater than your assets it indicates negative net worth.
Every time that your company has zero or negative net worth, it’s a good idea to take steps to overcome this by broadening your sources of revenue, investing more capital or collecting unpaid debts.
Through this document, you can analyze and monitor some of your company’s financial indicators, sometimes with the help of other documents. This shows that a balance sheet is an instrument used for analysis and decision making just like indicators.
Take a look at these five indicators and the results that they offer.
This margin indicates how much money your company generates with every sale or service it offers.
To calculate it, divide the total revenues for a given period by the net profits, which can be found in the income statement. Then multiply this result by 100 to determine the net profit margin percentage.
One of the totals found in the balance sheet is the company’s accumulated profit during its entire existence.
With the current year’s balance sheet and those from previous years in hand, you can calculate your company’s profit growth year after year.
By dividing the equity listed on the balance sheet by the company’s net revenues, you can calculate the return on equity percentage, which indicates how much money your capital and other equity investments generate for your business.
Specifically, in relation to the document’s assets, such as vehicles, real estate, equipment and mobile assets, the return on assets shows how much money they generate, taking into consideration the investments made in acquiring them.
Beyond this, to obtain more specific results, you can make this calculation just using a portion of the revenues and one element of the assets.
For example, an insurance company that offers corporate cars to its salespeople can divide the total value of signed contracts by the value of the use of the car utilized by the salesperson responsible to achieve these sales.
Or, when dealing with the opening of a new office, you can divide the total revenues by the equity investment made to open it. You need this to determine, within a more complex panorama — which involves other factors — the total return on investment of this expansion.
To obtain this ratio, you need to sum the company’s short term liabilities and divide them by its total assets. Then you can multiply this result by 100 to obtain this ratio in percentage form.
Analyzing this indicator, the lower the ratio is, the better it is for your company. If it is very high, it’s time to evaluate your costs and even your processes one at a time to decrease your debt and increase your gross and net revenues.
Now that you know what the balance sheet is and all its structure and importance, let us understand the obligation of accounting records, which are used to compile all the financial transactions of your business, including assets, rights and obligations.
The accounting record is mandatory and valid for any type of company. In addition, organizations must also present the recorded facts, which are the financial records themselves cataloged in the daily ledger. To do so, they need to be updated and provide real information on the current moment of the organization.
The balance sheet is more than just an obligation. This document can assist in different processes and situations to which your company will be exposed. Therefore, see below the main consequences of not having or keeping your balance sheet updated or at hand.
The balance sheet is an important resource of evidences for tax proceedings, and the information in this document can be used during the discussions. However, when a company does not present it, the defense will become more fragile and will prove that the organization is not compliant, and does not even have its documents and processes organized.
According to Income Tax (IT) standards, companies that do not present financial statements that indicate the profit have its revenues demarcated in 8%, which is the limit of presumption of income for companies in the industrial and commercial sector, and in 32% for businesses that operate with the provision of services.
The financial performance of your company will be known with this document, as it reveals important data on profit, among other indicators.
Therefore, by neglecting it, the company will be at the mercy of the cash flow alone, which is not complete enough to aid in performance and strategy analyses that improve the business behavior. In addition, as it is mandatory, your company will not be able to file a request for court-supervised reorganization.
Indicators are important tools for knowing the performance and health of a company. Some metrics aid in the balance sheet evaluation process and allow you to learn about the economic and financial situation in a reliable and up-to-date way so you can make the best decision. Here is how to calculate some important indicators:
Now that we understand what the balance sheet is, it is essential that you establish it in your company. That way, liquidity indices are ensured with the purpose of leveraging your business, in addition to correctly meeting the accounting standards imposed on all companies.
Did you like this content? Then check out how to make a good indicator management and learn about the importance of this task for your company!
Many people may have chills just thinking about presenting a new idea to the board and co-workers! Or having to prepare to present that PowerPoint with current data of the enterprise they are responsible for.
Presenting a project doesn’t have to be a source of stress. It can go smoothly, as long as you prepare yourself for it. Knowing what you will present and being confident in your speech are essential items for good communication.
Do you want to know more about this subject? Read the article and check out our tips for you to be well prepared for the presentation of a project!
How to prepare?
We know how difficult a presentation can be, especially when it’s a project that might guarantee a new client. Here, we’ve listed some measures to make this process a success. Check it out!
The first step is organizing the ideas. More than a preparation, it is a way to have a logical order for things. Of course, to do so, having a beginning, middle and end is essential. This is the time to get all the information and organize them.
Set the introduction well, showing how the project will be useful. Then give a detailed description of the project, and finally, draw a conclusion showing what might be won, what are the possibilities.
Understand what the project is about, what are the start and end dates, and what are its key milestones and goals. Keep in mind that this introduction should be clear, so that everyone present understands well what the proposed goal is and what is to be achieved.
Use a very simple and straightforward language, avoid that the presented goals seem dubious. This may generate certain mistrust on the part of other people.
Pay attention to whether your idea is aligned with the culture of the organization. More hierarchical companies are more resistant to change or to support new causes. Try to study well and have a real basis in order to get better chances of support.
In addition to understanding the particularities of the organization, also pay attention to who your target audience will be during a project’s presentation and try to customize your work as much as possible.
Presenting facts is critical to getting support. Use hard numbers and information that can be easily proven. It is much easier to make decisions based on numerically palpable data than on assumptions.
When using actual data, there is another point that deserves more attention: the sources. It is important to cite the source when presenting the information, because, in addition to showing that there is a basis for what is being said, it confirms that there was research and attention in presenting these data. If it’s not possible to prove it, it’s better not to mention it at all.
If you have already reviewed the material and you’re all set, now is the time to prepare to disclose it. The oral presentation is always a moment of anxiety, therefore, doing simulations, re-reading the data and having cards with key information are good ways to be well prepared for this moment.
If possible, rehearse it alone, present it to other colleagues, and ask for their opinions.
Have a predetermined time for the duration of your presentation. Presentations that run for too long make the audience lose the main focus and disperse. Short presentations may give the impression that they were poorly prepared. Look for a middle ground and practice beforehand.
It is very important to leave a time for questions and possible discussions that may arise.
Mockup is nothing more than a model, in scale or in real size, of the design or device you are going to present. One of its functions is to show the client how the branding idea will work for them, both on digital media and physical material.
In addition, using this resource may help impress the client even more. Presenting it only in a digital location may not have as much effect as seeing the visuals at hand.
Many questions and opinions from listeners will arise during your presentation. Listen and answer to each of them clearly and firmly, showing that you know the ins and outs of the subject while still being open to possible suggestions.
Do your best not to take any negative opinion personally. While presenting a project, be it a new idea or a suggestion for improvement, be aware that negative criticism may arise at any moment.
Believe in the proposal that will be presented! Study well all the points of improvement your idea will bring, as well as how much will be spent for its implementation. Be confident and clear in your speech.
Show excitement during your presentation. By doing so, you will be able to involve people in your cause, and it will be easier to get a positive receptivity.
To help you present better, we’ve selected some important points to outline a schedule for your presentation. Keep reading and understand!
The scope or scheme of the project is the first step to getting started. Here the paths that must be followed for it to come to life will be defined; it’s a kind of sketch. Its preparation will be essential to determine important information such as: what the resources and budget will be, and how long will take to get the project ready.
This process is the deepening of scope, and in this topic, all the defined steps will be broken down into smaller parts. That is, it establishes what should be done for each thing that has been determined in the scope.
Once this is set, the next action is to list the activities according to their importance and execution. This will be a good moment to define whether they will depend on other smaller activities to complete them.
Another important point of the schedule is to set the deadline to complete each activity. This procedure will get easier, as you know what will be done and what the sequence is. A good tip is to use other similar projects that worked out well to get a sense of it.
Also, don’t forget to rely on your team to help you better define the deadlines for each activity. This is all the more important if all members are involved in this process, after all, it’s necessary to take into account how long each employee takes to complete his or her function.
With all this survey, you will already have enough information to create your schedule. Don’t forget that, nowadays, there are many technologies that help organize data, including project management software that can contribute to make the process more organized and avoid errors.
We’ve seen what the steps are to prepare for a project’s presentation. We remind you that the presentation doesn’t need to be regarded with nervousness. It is possible to practice to have a good experience. Always try to engage with your audience in a positive way, as this will be the key to getting good receptivity. With planning it is possible to sell the idea better and increase the chances of success.
Well, with these 9 tips for presenting a project you will be more than ready to not only expose your work’s ideas, but also to make yourself understood. Did you like our content? Then share it now with your friends!
Managing a company requires expertise. Normally, the person that fulfills this function has sought this preparation for this position in college, for example. Other relevant sources of information are journals and magazines. However, nothing is more useful to an entrepreneur than evaluating the numbers of the business itself. That’s why preparing a cash flow forecast is so important.
A cash flow forecast is an interesting study that can help an entrepreneur make correct financial decisions quickly. It’s natural that companies pay attention to their cash flow, but by organizing this information in a better manner, they’re less likely to be susceptible to the influence of external factors.
Interested in this subject? Then this article will help you gain a better understanding of it. Let’s begin!
The goal of a cash flow forecast is to provide a businessperson with a future panorama of the business, focusing on the short term. This way the company’s controllers will know during which periods the amount of cash exiting the company exceeds the amount of cash entering it.
One of the many uses of this control is organizing the payment of bills so that the financial process doesn’t harm the company’s cash flow, putting the company’s investments in danger.
Over the long term, a cash flow forecast helps a company plan its financial activities, reveals if it has liquidity, and improves its management of working capital.
It’s possible to prepare a cash flow forecast at any time during a company’s existence. Ideally, this type of planning should begin when the company is founded, because it enables the entrepreneur to evaluate investments in a more secure manner.
The first step is to define the value of the company’s initial balance. Then you should identify the fixed and variable costs. One tip is to control all the money that exits the company, however small the amounts may be, because if they are recurring, they will end up adding up to large amounts over time.
If the company has debts, it’s important to include them in the variable costs, identifying the applicable interest rates. If the company plans to take out a loan, this can also be included in the study, even if the loan hasn’t been taken out yet. This is important to discover whether the transaction is viable.
Identify the amounts that will be entering the company’s coffers as well as the period in which these deposits will occur. This way, the company will understand when it will have capital available and what the expected deposits will be.
This study can also include other information depending on the company’s situation. It’s important to stress that these are forecasts. They don’t take into account the bankruptcy of a client, for example.
Even so, it’s highly recommended that you have a cash flow forecast, because this way your company won’t be caught by surprise by external factors, and financial decisions can be made with greater confidence.
One important tip is to modernize the collection of this data to reduce the frequency of errors. Don’t dream of preparing this study with pen and paper. Creating an Excel worksheet is also out of date. The ideal is to work with specialized software to perform these functions.
Now that you understand what a cash flow forecast is, make sure you sign up for our newsletter to continue receiving articles about the business world by email. It’s free!
Cerca de 500 das maiores empresas estadunidenses — e até o seu governo — possuem departamentos dedicados ao monitoramento de cada passo da concorrência. Mesmo que muitos desses métodos de “espionagem” não sejam indicados, essa é uma forma de lidar com a imprevisibilidades, antecipar surpresas e mensurar os fatores que interferem no sucesso de um negócio. E isto não apenas no âmbito nacional.
Essa estratégia é conhecida como inteligência competitiva. Sua ação consiste em captar informações relevantes sobre a concorrência, os clientes, os fornecedores e o mercado como um todo, não apenas para reagir diante de imprevistos, mas para antecipar tendências, moldar um modelo de negócios sustentável e criar estratégias que impulsionem o crescimento.
Neste post vamos falar um pouco mais sobre a inteligência competitiva e por que a sua empresa precisa adotar essa estratégia. Confira!
As organizações precisam coletar todas as informações do mercado de maneira inteligente, não apenas para entender o comportamento do seu cliente, mas, principalmente, para reduzir custos.
Pode não parecer, mas a concorrência é uma excelente fonte dessas informações. Utilizar a inteligência competitiva, também conhecida como IC, é uma maneira de aprender a otimizar as suas estratégias no curto e no longo prazo, com base na competição definida pelo mercado.
É uma forma prática e uma metodologia inovadora para monitorar as atividades e analisar o que os concorrentes andam fazendo, para definir o que é tendência no mercado, avaliar as melhores oportunidades (SWOT) e superar os resultados desses competidores por meio de planos e decisões mais acertadas.
De maneira mais coloquial é “conhecer o inimigo para conhecer a si mesmo”. Mas a verdade é que com a globalização, com a mudança no comportamento dos consumidores e do mercado, o que antes era visto como uma “ameaça” transformou-se em um aliado para que gerentes e controllers adotem um estilo de ação mais focado em resultados.
Muitas empresas têm o foco em um modelo de análise e acompanhamento de inteligência de mercado informal — por meio de pesquisas esporádicas, coleta de dados irrelevantes ou pela imprensa. Essa prática se mostra ineficaz, porque a maioria dos processos já está em andamento — ou pior: já aconteceram.
A inteligência competitiva ajuda as empresas a aprender mais rapidamente e a mudar o seu plano de negócios de maneira mais inovadora. No mercado onde surgem cada vez mais negócios com a mesma proposta, com o mesmo padrão e até com os mesmos produtos e serviços, se diferenciar é a regra de ouro para criar vantagem competitiva.
A aplicação da IC é baseada em forças como entrada, poder de negociação dos fornecedores e compradores, ameaça de substituição e rivalidade. As estratégias se baseiam em analisar essas informações e formar uma equipe de planejamento que identifique oportunidades e ameaças, compreendam os impactos das suas ações sobre o mercado e sobre a própria concorrência.
A internet tem facilitado essa análise graças às numerosas informações disponibilizadas on-line, onde há uma troca efetiva de dados entre organizações, fornecedores e usuários e uma socialização em tempo real — o que torna possível criar ambientes únicos para coleta de dados.
Uma ação essencial para as organizações é capacitar profissionais não apenas para reunir essas informações, mas também para interpretá-las de maneira proativa — e não apenas reativa, como acontece com a maioria dos negócios no mundo empresarial.
