Pit & Quarry, June 2014
Budgeting for profits Budgets are almost essential for every business and can help aggregate producers plan for a prosperous future ISTOCK COM VIOLKA08 S uccessful aggregate producers usually develop budgets to monitor progress toward their goals help control spending and predict cash flow and profit In other words budgets are an operators plan of action for his or her business Not only are budgets a plan of action for the aggregates business they are a tool for evaluating performance at the end of specific time periods At its most basic a budget is a systematic method of allocating financial physical and human resources in order to achieve strategic goals Developing a budget Many operators begin in business with a mine or a property lease basic equipment machinery a line of credit and the best intentions Initially most do contemplate the financial needs of their operation Too often however the financial needs are not given all the attention they deserve especially as things start to slide downhill Far too many operators honestly believe things will work out laboring under the assumption that the road to success is paved by simply working harder Unfortunately for these operators working harder may not be the solution if they havent focused on the fundamentals of business success As in many things timing is everything Rent salaries suppliers and other bills all must be paid on time or businesspeople risk losing both access to credit facilities and even the operation When overdue bills are combined with customers who refuse to pay or delay in making payments it is all too easy to be caught in a financial squeeze Planning and building a successful business should start with the preparation of a business plan budget and the implementation of appropriate internal controls Every aggregates producer should be prepared for unexpected interruptions that may affect the operations finances and in particular have appropriate insurance in place A budget should be an important part of any financial plan and should include all expenses that the operator knows of and can anticipate and when expenses must be paid An amount for unexpected expenses should always be included because it is Murphys Law that costs will always be greater than expected particularly as the volume of work increases Build in marketing time and expenses Most of all build in a draw After all if the crushed stone sand or gravel operations owner shareholder or employees arent looking after the operation no one else will Comparing total expenses to anticipated revenue using a historical basis to forecast income BUSINESS BY MARK E BAT TERSBY Small quarry or plant operators are more vulnerable to volatile markets or unexpected costs These businesses should review their budgets more frequently 36 PIT QUARRY June 2014 www pitandquarry com
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