As you wrap up (or perhaps are just starting) your 2023 budget, you need to address the ongoing uncertainty of the current economic and market conditions.

Some things have settled down, but many things remain in flux.

How will you make next year as fruitful as this year or even better?

As I organize my upcoming third-annual financial masterclass, I have started to think about what priorities and questions to focus on next year.

Here are some of the financial questions you can use to wrap your head around these uncertainties

(Print this out and give it to each budget manager as a guideline to spur thinking.)

1. Predicting the big non-labor costs.

How much did inflation impact your 2022 year, and how much do you predict it will impact your 2023 numbers?

Compare your original budget to what actually happened, and then decide how you think 2023 will play out. Break this down by the following to see the trends:

• Materials
• Payroll overhead
• Non-payroll overhead
• Trucks and Equipment
• Fuel

It’s no longer enough to raise your prices — you have to manage and plan for these changes.

Also, think about what mid-year cost rises you expect next year. And conversely, how can you negotiate with your vendors by consolidating them to reduce your costs or increase your year-end rebates from vendors?

2. Labor factors into operations and growth

What wage rates will you need to pay next year vs. this year vs. last year? Look at your trends, and make sure you get a return on your labor investment.

Also, do you think it will be easier to hire good people in 2023 or harder? Many of my clients have figured out how to crack this nut. You need to as well, in order to get beyond the basics of operational budgeting.

Lastly, Are you planning on growing your middle management or sales team next year? Will you need to recruit them externally? Recruiting and hiring the best people takes money.

3. Revenue growth or shortfall

How will the economy impact demand in the next 9-12 months in your market area, and how should you be prepared? How will your market react to your pricing, and how should you respond to prospects looking more closely at your bids? Will your maintenance clients curtail their enhancements spending, and what can you do to maximize their value and your contribution dollars? What will happen when the average size of install jobs drops in 2023? How should you pivot to deal with this? The big question is, how will you improve your marketing next year to develop and open up new sources of leads?

4. Managing overhead while being tactical

You need a plan A, B and C. It may feel like guessing, but it’s better to have a plan before things get busy.

• Plan A: How will you keep growing through a recession?
• Plan B: If you find yourself in a revenue squeeze, how will you handle overhead.
• Plan C: If revenue starts strong but then falls weak in the second half of the year — or vice versa — what will you do?

You also need to think tactically about your competitive market next year:

• How should your mix of services change to take advantage of gaps in the market in 2023?
• Where do you see your competitors falling short, and how will you be poised to take advantage?

5. You can improve your budgeting process

Are you aware that savvy budgeters have already put a draft of the operation’s 2023 budgets in place? No matter what, you still need a closer look at what’s coming down the pike in 2023.

These are just some of the questions I have in mind to cover in my third annual Financial Master Class. We will benchmark the industry’s 2022 performance, 2023 plans and identify the best-in-class metrics for profit/loss, balance sheet, markups, overhead staffing, divisional numbers and more.

Your challenge

Don’t forget the long-term planning process while you react to the short-term economy.

The key to entrepreneurial growth is to keep your long-term plans in focus, as you make short-term pivots. As you gain financial clarity this winter, also communicate your three-plus-year vision! This will help everyone stay on course as you navigate 2023.

Join more than 200 attendees and me for this two-day virtual financial masterclass on Jan. 5-6. The early bird discount ends this month on Nov. 30!