2022 makes way for 2023. For your finance team, this means one of the most critical tasks is coming up - budgeting. How do you set the right course for your money? How do you prepare your company for the uncertainty and the recession risks?
In this article, I’ll explain what software companies should consider when creating a budget for the next year.
3 steps to better budgeting
These steps involve a careful inspection of the present, past, and possible future performance of your company. By combining the three, you get a three-dimensional view of the organization’s growth dynamics that will help you adjust the financial plan for the next year.
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Conduct an honest review of your company’s past performance. Look at what has worked and what didn’t, the reasons for that, and what you can learn to improve your organization’s performance in the future.
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Also, you’ll want to clearly understand your business goals to be able to plan. When determining your goals, consider the current market context and the upcoming regulatory changes, if any. While you can’t completely future-proof your budget, relying on economic forecasts when budgeting is a good idea, too.
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Based on the findings from the previous two steps, you need to decide where to cut and what to add to your budget. The tips I share next will help you strike a balance between these opposites.
Next read: Top 11 Budgeting & Wealth Management Tools for Your Business and Personal Finance
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Budget planning tips for executives
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Stop and cut strategic initiatives with unclear ROI for 2023. Sometimes you just have to terminate those Big Fancy Projects.
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Audit your cloud, and IT services expenditures. Dispose of the duplicated services. This will also allow you to decrease the fragmentation of your cloud services.
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Get rid of your office space, or keep only a tiny space. In post-lockdown remote work is the new normal for software engineers.
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Review the actual results of your team members. Let some people go. But have an open conversation with them about why.
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Start hiring talents everywhere. You can find and hire a professional service vendor with a software engineering team in offshore locations. This will keep the cost reasonable.
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And the most important: make sure that you provide a clear ROI offering to your current and potential clients. This way, they’ll have all the reasons to keep choosing your services.
Cut expenses, not your development quality.
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On the final note
Success loves a plan and flexibility. With the tips you’ve got from this article, adapting to the turbulence the new year might bring will be much easier and less costly. You can get creative with these ideas to fit them in your business context best.
If you’re looking for a way to cut development costs, hiring a seasoned offshore team that knows how to optimize the process to cut unnecessary expenses is an optimal solution. Let us know your current challenge, and we’ll show you how we can help.