There are a number of things that you really need to have when you’re running a small business and one of those is a business budget. Although every business is unique a budget is required if you want the business to be a financial success.
A budget helps to clarify your goals and set your target and if you think about it there is no way you can meet (or exceed) your target if you don’t have a target to start with. Imagine running a race and there’s no finish line!
So what’s the big deal with a budget?
The benefits of a budget include the following:
- Provides clarity of your business goals
- Allows you to measure your business performance
- Enables you to make strategic decisions
- Gives you the insight to take corrective steps in your business
- Allows you the opportunity to share the plan with team members
When you sit down to write a business budget it allows you to clarify where you want to see your business in the future. You can create a sales forecast (and we do recommend that), but without a budget you could find yourself worse off.
Now although it’s nice to get positive feedback from clients when it comes to measuring your business performance it’s really all about the numbers. If you don’t have a budget you won’t know how your business is really doing.
Sales may be up, but unless you know what your net profit is you really don’t know how well your business is performing.
When it comes to making business decisions you’ll find it’s a lot easier with both a business plan AND a business budget. You know where you want to take your business and you know where you are and where you need to be financially in order to get there.
When you know these things then as opportunities come up you will know if you are in the right place to take advantage of them.
If you are keeping an eye on your budget regularly you will be able to see when things aren’t going in the right direction and take action to correct it. This could mean reducing your expenses or running a promotion to increase your sales.
Having a business budget and business plan that you can share with your team members can be a great idea. It shows them exactly what you expect of them and the results you need. When everyone is on the same page it can help your organization run smoother, it’s like the old adage T.E.A.M – together everyone achieves more.