Budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you.
Ultimately, budgets help you make goals, communicate with your team, and grow year over year. Sure, they’re not the most fun aspect of business, but they’re super important! Without them, it will be super hard to scale.
Furthermore, following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.
Reasons for Budgeting in Business:
1. It will communicate your goals to your team.
Putting down your revenue and expense expectations down on paper helps your team to know what you’re envisioning for the company.
2. It will show you the relationship between what’s going in and what’s going out.
It’s not just about seeing the numbers; it’s about the relationship between the two. To give you an example, if you can’t make that business loan payment, maybe it’s time to stop renting that vacation home in Florida. But if you don’t want to stop sunbathing, then you have to do something about it by making sure you boost those sales this quarter.
3. It will make you more money.
Yes – I said it! It will help you decide how much you want to make for the year so you can make a plan in order to reach those goals. But your budget can also show you if those goals are realistic or not.
4. You will be able to adapt to change much better.
If your business is so predictable that you know your business revenue and expenses and they never change, well maybe you don’t need a budget (I’m being sarcastic). Business is incredibly unpredictable! If you have a budget and you lose that key client, you can see how it will affect the rest of your business so you can make the changes necessary to get back on track.
5. You will make decisions MUCH faster.
You can ask your budget questions – lots of them! What kind of questions can you ask it? Well, you know how you’ve been wondering if you can hire that new project manager but not sure if you can afford to do it? Your budget knows the answer. Or how about re-doing your website? Your budget also knows.
If this wasn’t enough reason to get you to build a budget, download our small business budget template that comes with an eBook and video series to help you build your budget. I bet by the end you’ll walk away with a working budget that you can implement and use for your small business.
How to Create a Small Business Budget
- Get business budgeting software to help you out. You can also outsource bookkeepers and financial managers to do this task for you instead of getting tied up on reports with a software.
- Check out previous spending and revenues. Look at what you’ve made before so that you can make accurate predictions for the future.
- Make forecasts, then compare them with actual numbers. When you create a budget, make forecasts about what you expect to make. As time goes on, compare your expectations with reality. Budgeting software can help you compare.
- Assess, and see how you’re doing. Make adjustments as you need to. The process of assessment will help you determine reasonable goals.
Bookkeepers for Your Small Business Budgeting
Setting a budget isn’t complicated but it can still help to involve an expert. A bookkeeper or accountant can double-check the numbers and help you make realistic predictions about business growth, upcoming expenses, and tax exposure. They can also advise you on what to do if the actual numbers deviate from the predicted ones.
Bookkeepers and accountants charge for their time. But when it comes to business budgeting they will often save you far more than they cost. So if in doubt, ask one for help from a trusted bookkeeping firm like EJS Accounting.
In Australia, small business owners are already discovering the benefits of using third-party talents to do their accounting tasks. Get an experienced bookkeeper on board and see your finances properly organized and your business grow. Learn more business tips on our weekly blog on https://ecommercecorporation.biz.