Distilling your business strategy into one page of numbers is a challenge, but that’s exactly what a well-conceived budget does, and in the annual cycle of the think-ahead CFO, now’s the time to start on next year’s budget.

A budget is a creative process, and the creative process takes time. It can take several months to finish a budget.

If you’re groaning already, we feel your pain, and below we give you an easy first step to creating next year’s budget. Many entrepreneurs think of budgeting as pure drudgery, so they avoid it. But if you start now, you’re more likely to be done by year-end (for 12/31 FYE firms), and then this critical financial tool will guide your decision-making for all 365 days of next year.

The first step is easy: start your wish list.

Talk with your staff and key vendors about what’s coming up between now and the end of next year. What would you like to see happen differently in areas such as these:

• Staffing – add/reduce staff, compensation changes, benefits
• IT – hardware/software purchases, on-demand software subscriptions, upgrades, outside support
• CapEx i.e. capital expenditures – investments in vehicles, furnishings, equipment, buildings
• Occupancy – expand/contract your facilities, upgrades
• Production process improvements – service, retail, wholesale and manufacturing firms can always improve quality and reduce costs
• R&D – resources to research and develop new products and services, or improve existing ones
• Sales and marketing – new markets, new campaigns, customer service initiatives

As you do step #1 for creating a budget start your wish list - don’t limit yourself. If an item is “status quo,” just note that and move on. Focus on what’s going to change…and have big dollar consequences.

Right now your job is to expand the company’s strategic horizons. So go ahead and open the doors – wide open.

In future posts at this blog we’ll walk you through a five step process – one per month – so that before the holidays you end up with a financially fit budget in your QuickBooks file. Then next year you can track over/under with a few mouse clicks, and you can update your budget throughout the year for more accurate forecasting.

Further reading: Business Owner’s Toolkit, http://www.toolkit.cch.com/advice/budgets.asp