In running an auto dealership, there are a lot of expenses you’re looking at. And you’ve got to keep track of everything somehow, and the way to do that is to make a business budget. The problem is that making a budget sounds like a lot of work and it sounds complicated. How do you create a budget for your auto dealership? We have a few tips for writing your business budget.
Tips for auto dealership budget
1. Know what the budget’s intent should be.
First of all, you have to know what your budget’s goal or intent. A budget should be a guiding outline that can help you make decisions about where the money is going. That being said, you should look at your attitude towards your auto dealership budget. Are you feeling positive about it? You’re hopefully feeling okay about the whole endeavor. That’ll make things easier.
(Then you have to ask yourself if you’re going to budget on an accrual basis to estimate your net income, or if you’ll take a different approach and budget for cash flow. There’s some strategy involved.)
Another thing – is everyone in agreement on the plan? Whatever budget path you’re on, make sure your team is on board.
2. Know your industry and your business.
When you’re making an auto dealership budget, you need to make sure you know your business and your industry inside and out. Are there regulations impending that could impact your business? How does your dealership compare to the standard of the industry? Your business is unique, of course, but if you see areas where your business is very different from the “norm” and why that is, that can help you with your spending.
3. Have a stellar budgeting team.
Of course, you’re not in this alone. You need to assemble a team who can help. So, consider who you want to tap to be a part of your team, who can be helpful and present valuable insight? The people who are going to deal with the budget should be a part of the conversation. Typically only management gets involved with budget matters, but maybe you have other trustworthy team members you want to bring in.
4. Look to the past and the future.
The past can help you with your budget, too. Look at your financial results from the previous five years. You can figure out what expenses are going to be predictable or consistent. But you might also see that there are things that have gone up and down. Why have these things been changing? Can you identify why? These changes that you can see in the past can help you in the future when you’re anticipating these changeable costs.
5. Be prepared for the unknown.
We can’t see the future. But we do have to be prepared for it … which is complicated. Since you never know what’s going to happen with the economy, you need to have a plan to build up an emergency fund. That way you’ll have a stash of money that you can use if it’s needed. Anyways – you need to figure out what your plan is for creating this emergency fund.
6. Know that the budget can change.
The budget isn’t something that will never ever change. You might need to adjust as you go. And that’s okay. Updates are okay. But when you make updates or changes, make sure you’re understanding how everything fits together. When you change something, it could affect other things, and you need to adjust those areas as well.
7. Be detailed.
You’ve also got to be detailed with your budget. Think about how detailed you need to be in order to properly track your expenses. Consider how you want to break everything into lines and categories. What’s going to be the easiest, most effective way to organize it? You want to make sure everything is broken down in a way that helps you identify why certain items are not entirely adding up if there are issues. It’s important that you’ve organized it to pinpoint these things.
8. Decide what tool you want to use.
There’s also a choice to be made concerning the tool you want to use for your budget. Is Excel going to cut it? If you have an accounting software, see if it has an accounting tool that can help you. What does this tool do? How can you use it to do more work for you? Find out how your budget tool can help make the whole thing more efficient.
9. Figure out who’s going to get to see the auto dealership budget.
Now, transparency is great. You can get feedback from people and get a conversation going. But you have to consider who you want to be able to see it and who should see people. You have to find out the balance between when to be transparent and what financial information should be kept more confidential.
The prospect of creating a budget for an auto dealership might seem extremely daunting. Hopefully these tips were helpful! The bottom line is that you need to know your business, know your industry, and enlist help from the right people. Take the time to put together a business budget for your dealership. It’ll help guide you when it comes to spending money.
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