Business owners have the option to choose between a « 3+9 » or « 6+6 » forecast when budgeting. The former shows three months of actuals and nine months of forecast, while the latter shows six months of each. The accuracy of the forecast improves as more actual data is included, making the « 6+6 » more reliable earlier in the year and the « 3+9 » more accurate later. Seasonal fluctuations and revenue streams should be considered when selecting a budgeting technique. Regularly reviewing and adjusting the budget is crucial for achieving financial goals and enhancing business performance.
A ‘3+9’ Forecast vs. a ‘6+6’ Forecast: Which One is Better?
As a business owner, it is important to have a budget in place to ensure that you are meeting your financial goals. One common budgeting technique is the ‘3+9’ forecast, which shows three months of actuals and nine months of forecast. Another technique is the ‘6+6’ forecast, which shows six months of actuals and six months of forecast.
The main difference between these two techniques is the amount of actual data included in the forecast. As the year progresses, the forecast for the year will become more accurate the more that it comprises actual months and fewer forecast months. This means that a ‘6+6’ forecast may be more accurate earlier in the year, while a ‘3+9’ forecast may be more accurate later in the year.
It is important to consider the nature of your business when deciding which budgeting technique to use. If your business experiences significant seasonal fluctuations, a ‘3+9’ forecast may be more appropriate as it allows for more accurate forecasting during the busiest months. On the other hand, if your business has a more consistent revenue stream, a ‘6+6’ forecast may be more suitable.
Regardless of which technique you choose, it is important to regularly review and adjust your budget as necessary. This will ensure that you are staying on track to meet your financial goals and can make any necessary changes to improve your business’s performance.
In conclusion, both the ‘3+9’ and ‘6+6’ budgeting techniques have their advantages and disadvantages. It is important to consider the nature of your business and its revenue stream when deciding which technique to use. Regularly reviewing and adjusting your budget is essential to ensure that you are meeting your financial goals and improving your business’s performance.
References for What is a 9 3 Budget?
- The Balance: What Is a 9/3 Budget?
- Investopedia: 9/3 Budget
- The Balance: What Is a Zero-Based Budget?
- Dave Ramsey: How to Make a Budget
- NerdWallet: Zero-Based Budgeting: A Beginner’s Guide
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