A Budget: The Blueprint for your Business
Budgeting isn’t the most fun or exciting element to business ownership…unless you’re an accountant like me, I find it very exciting! All kidding aside, having a budget is absolutely crucial to your success. Think of it as the blueprint for your business. You wouldn’t build a house without blueprints, right? Then you shouldn’t build your business without a budget.
Starting a brand new business? You should set a budget early on to gauge just how feasible your business idea truly is. Are the funds needed to get things off the ground there? How much revenue will you need in the first few months or a year to keep afloat? You must think ahead. For an established business, the budget is a way to keep things in check at all times. Are things on track? How could you improve your cash flow? Are there expenses that you could cut, etc.? If constructed correctly, a business budget should be able to answer most, if not all of these questions.
Operating a business on a day-to-day basis when it comes to the finances is pretty risky. This often leads to overspending by business owners and almost always, the need to dip in to cash reserves. In many cases, it causes the business owner to begin to mix their personal money with their business funds, which muddies the waters when it comes to things such as taxes and much more. It’s like walking through a house with the lights off. You might catch some glimpses of light from the outdoors every now and then that will make you feel as though the business is running smoothly, but the darkness will almost always catch up to you.
A good plan is to create at least a one year budget. If you are just beginning your business, you will need to do some research to come up with the proper figures. A CPA would be your best partner in this exercise. An established business owner should always compare the differences between budgeted numbers and actual figures from the last couple years to help them come up with a realistic budget for the upcoming year. Again, lean on your CPA for help with this. It’s what we do best.
Once your budget it set, don’t become married to it. It’s your roadmap for running your business and it won’t fail you if it’s been prepared correctly. However, it’s a work in progress and you may have to revisit it from time to time. An unexpected expense, a large customer going a different direction, an increase or decrease in business- just a few events could cause you to revise your budget. But, the budget is what helps you to be prepared for those turns in the road. Be open to being flexible and know that your CPA will advise you on any and all important financial decisions based on the story the budget tells.
Back to my blueprints for building a house analogy… you would also need an architect to help design your dream home. Think of an accountant as the architect for your dream business. We can help you draw up a budget that is realistic and helpful. We can do the research needed to help you determine these figures if your business is just getting off the ground. If you’ve been in the game awhile, we can help your tweak what you already have in place so your business can grow at a faster rate. From there, your accountant can help you navigate the sometimes choppy waters of business ownership. It’s one of the most, if not the most, important relationships you will establish as a business owner.
No matter what your business, contact Holbrook & Manter today for assistance with your business budget. You’ll quickly see why business owners across central Ohio and beyond have trusted us for over 95 years. We’ll build a sound relationship with you and celebrate right along with you when your budgeting efforts lead to business success!