Keep that Budget Rolling   

You've completed your budget for the next 12 months. Great! Put it on a shelf where it can gather dust with the business plan you put together when you first opened up shop.

Not so fast! Why in heaven's name would you go to all that work to put a budget together just to let it languish unused?

The budget should be frequently (at least monthly) reviewed and updated as you go. It will always be 12 months into the future, so as one month drops off into history, you will add another. For example, if you started by budgeting June to May, as you complete operations for the month of June, you will do three things:

1. Compare your actual June performance to your budget. Be certain you understand any large differences and why they occurred. Did you let your expenses get out of control? Did you budget badly? Did some event outside your control occur? Pretend that you have to explain the results to a board of directors. How would you characterize your company's performance?

2. Make changes to the budget based on any new information. Now that you have another month of operations under your belt, you may find that the projections must be fine tuned once again. The budget is a living document and is meant to be updated and changed.

3. Drop June off the budget and add next June on at the end. This June is now history. It has already occurred and there's nothing you can do about it now. Project your revenues and expenses for next June, so that your budget remains a 12-month document. This is called a "rolling 12."