It can be one of the best tools for business success, yet many small business owners – new and seasoned don’t have one. Actually, if it’s implemented it can be a very powerful financial management tool. Because some small businesses may have one but don’t use it. That tool is an operating budget.
I know for some small business owners, the idea of budgeting can feel restrictive, boring and not exactly sexy because it involves numbers. Then there are those that have operated so long without one that it doesn’t seem like a tool or resource they need.
Well, what if creating and utilizing a budget would generate more revenue and profit in your business? What if creating and utilizing a budget would make it easier for you to achieve your business goals?
That’s exactly what it can do if created and implemented. Budgeting isn’t a process by which you decide what you can’t spend in your business. It’s a deep dive look at how your company plans to spend and allocate funds monthly. It’s a way to direct money as it flows into your business instead of watching money come into your business then wondering where it all went.
Creating and utilizing a monthly budget doesn’t have to be a long, tedious, boring process. If you’re looking for a way to grow your business, below are a few ways budgeting can help.
The Money Plan
When most people think of budgeting they only think of the expense side. While expenses are a part of the process, your budget needs to include a plan for generating revenue as well. So, budgeting helps you plan for how money will be spent and how it will be generated both of which are extremely critical to business growth.
Proactive vs Reactive Decision Making
With a budget, you make decisions based on the financial goals of the business instead of reacting to the circumstance, challenge or bright shiny object of the day. Before a financial decision is made, first check your budget and ask whether it will support the overall goals of your business.
Focus On The Result
A budget keeps you focused on the result you desire. In other words, it’s a roadmap that directs and guides your business’ daily activities. If you ever find yourself wondering what you should do this month to grow your business, that’s a sign that you need to take your business goals and create a budget and action plan to achieve your goals.
After you’ve created your budget, set a date and time each month that you’ll stop and review the financial performance of your business. This financial review process will allow you to make adjustments to your strategic action plan and ensure you stay on track to achieve your business goals.
Have you created a budget for your small business? If not, then click here to book a complimentary Profit Acceleration session so we can discuss creating a budget and strategic plan that will grow your business and turn it into a profit generating machine.