Budget is not a dirty word. Unfortunately, it is a word that tends to have very negative connotations which causes people to shy away from creating and following their own budget. It makes people think of other words like limited, cheap, and broke. Words that no one wants to associate with themselves or their business.
The fact is that every business can benefit from a budget. Deciding to create one is the first step on your journey to reaching your goals.
Below are 3 tips for starting and maintaining the best budget for your business.
Know your own limits
I am, and have always been, a highly organized person. It comes naturally to me and I enjoy the feeling I get from creating an new or improved system that increases my efficiency.
This is not the norm.
The average person struggles to get organized, then normally fails to stay that way. And that’s ok! Even if you are the most disorganized person in the world, you can still learn to make, and stick to, a budget for your business.
The reason for this is simple. Creating an organizational system, like a budget, is completely useless if it’s not something you’ll keep up with. So, the first step in creating a budget needs to be to understand what you are willing and able to follow through with.
You need to be really honest with yourself about your own patterns and habits, then incorporate that information into how you create a budget. The most important part of creating a budget is setting yourself up to actually stick to it. Determine the best way to make that happen, then full steam ahead!
Know your goals
One of my favorite quotes is “A dream written down with a date becomes a goal.” What are your goals for your business? Do you want to increase your revenue? Open a new location? Or maybe create a family business that you can share with your kids?
A budget can help you achieve these goals, but first you have to quantify them. Write them down. Set specific amounts, and dates. If you want to increase your revenue, by how much? By what date?
This doesn’t have to be a scary process. These goals aren’t set in stone; you can change them if needed. Things change so your goals can change too. The scariest part of writing down your goals and setting a “achieve by” date is it can make you feel that you have failed. Sometimes your due date comes and goes, but you haven’t met that goal. It’s ok! It happens. The key is to evaluate why you didn’t meet that goal, then use that information to help set your next goal.
We all have goals in life and in business. Growing your business, early retirement, paying off debt; these are common goals that also have another thing in common. They are a lot easier to achieve if you use and follow a budget.
Know your business
Every industry is different, and every business within that industry is different. When setting a budget, it’s important to take those differences into account. For example, wedding caterers are generally busier in the spring and summer than in the winter. This change in revenue stream should be accounted for within the budget.
In industries with cyclical busy and slow periods, a budget can help you work through the whole year without entering the danger zone. You will be able to better plan ahead by analyzing your income from month-to-month and budgeting for the lean times that you know are coming.
One of the best benefits from a budget is the ability to look back at previous periods and see how you fared. Were your revenue expectations met? Were there any unexpected or expenses that you should account for next time? Take this information and use it to create better budgets as you move forward in your business.
Take the time to really analyze yourself, your goals, and your business to create a budget that reflects your specific needs. A budget is no good to you if it doesn’t reflect who you are and where you are going. Your budget should be as unique as your business in order to really serve its purpose.
A budget doesn’t have to be scary and definitely shouldn’t be avoided. It won’t lock you into a money pattern that limits you. Instead, it will help your business to thrive now and in the future.
Do you need help keeping up with your bookkeeping and creating a business budget? Contact me today for a free consultation to determine if a virtual bookkeeper can help you reach your goals