07 Jun Four Big Motives Why You Should Set a Business Budget
Many small business owners do not set a business budget when they begin. The reasons for this vary drastically. Some people have no idea that they should be creating a business budget, other times business owners don’t think that that is something they need to worry about.
According to Duke University, a business budget is “Simply put; a budget is an itemized summary of likely income and expenses for a given period. It helps you determine whether you can grab that bite to eat or should head home for a bowl of soup.” When you create a business budget, you are not only setting a guild line for your spending; you are making sure that your startup grows into a vibrant, flourishing business.
No matter what size company you are, you should be following the four reasons why you need to set a business budget.
Instead of seeing your budget as a hindrance, view your business budget like a goal. Because budgets are projected by how much revenue a business will have at the end of a set time, it becomes a great way to set and meet company objectives! Many companies have seen that budgeting leads to a surge in sales.
When you are on a budget, and you are working to stay below a specific goal number, your spending may drop drastically. A strict business budget will help you and your company control unnecessary and pointless spending.
At the end of a fiscal year, a budget is a great way to track and review all business operations. You can determine if you have met or exceeded your yearly expectations. If you have not achieved your budget saving goal, then it may be time to reevaluate some part of your business.
A well thought out and dispersed budget will show your employees and investors where your priorities lie. It will also help a business owner determine where he or she should be spending a good chunk of their time and energy. Make sure to allocate money to things such as computer upgrades and new program launches.
How often should I budget? Many business budgets are created for a fiscal year, but you can use business software to create quarterly or even monthly budgets. With a software program, you can get reports and detailed information about your spending.
How do I start? Start by keeping it simple. There is no reason to go into lengthy detail about your budget if you don’t want to, but make sure you are forecasting in all of the important general areas.
What do I do if I can’t reach my budget goals? Be flexible! While a budget is a tool for success, it is NOT set in stone! Make sure your business goals correspond with your budget and be realistic.
Do you know where your business is heading? To learn more about how we can simplify your accounting process, call us at 727.828.9945 to schedule your free consultation.
About Accounting & Business Partners
Accounting & Business Partners is a CPA firm with an efficient bookkeeping department. We believe that success lies in numbers. However, the drive behind the numbers is what truly matters. That’s why we look beyond the financial statements.