Why Do I Need A Budget?
A budget in short is a plan, it’s a plan for your money. How much you are going to spend, when you are going to spend and why you are going to spend. Just like in life it’s important to have a plan, it is also important to have a plan in Business.
To Help Plan & Prioritize:
Imagine if we could just purchase whatever we wanted for our business, whenever we wanted it! #thesweetlife. Unfortunately life doesn’t work like that, and even if it does for some business owners, spending willy nilly on whatever you want when you want it, is a surefire way to end up with nothing. For most of us we have to plan and prioritise our spending, we want to get the most bang for our buck and ensure we have enough money to spend on the things that really make a difference. A budget is an efficient tool to delegate out your spending.
Because Profit:
Who doesn’t like money! We do! Our businesses certainly do! Money is like oxygen to your business it affects every decision you make! Are you going to spend money or make money? To be able to spend money, you need to also be able to make money and a budget will make it clear how this is going to occur. A budget will help to ensure your business is going to be profitable in the coming year and will help to ensure you – as the owner can take a salary! #yaymoney
Highlights Less than Optimal Spending:
The budgeting process involves reviewing previous spend and planning for the future. This provides an excellent opportunity to delve into your previous spending habits and identify opportunities for cost reductions and improvements. In some cases it can also help to identify additional sources of revenue that may not have been as obvious before. I can guarantee you if you take the time to review your transactions for the previous 12 months you will 100% find something you can easily cut.
But my business is so small do i really need a budget? The short answer .. Yes! Budgets are even more important the smaller in scale your are. Large business with plenty of cash can afford to make a few hiccups every now and again, smaller businesses do not have that luxury. Still don’t believe me? Google some stats on small business failures.
A budget has so many advantages and is an essential non-negotiable component of any successful business. Yet statistically 60% of small businesses do not invest time in this valuable tool.
Not sure how to get started? Sign up for our free budget template here!
Clear Margin Consulting is a Financial & Strategy Consulting Firm based in Vancouver, Canada. We help small business owners to better manage their financials so that they can make better informed decisions and grow their business.
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