The BizFilings blog covering business tips and trends.
The Art of Budgeting for Your Small Business
Published on Dec 9, 2010
Read 'The Art of Budgeting for Your Small Business' at 'Time to Start Up,' the small business blog by BizFilings.
There's a question that small business owners often have but seldom ask. And if they do, it's in the sheepish voice of a kid asking whether doing homework is really all that important.
The question is whether a small business needs to keep an actual budget.
You can see why the question would come up. Many homes function without actual budgets in place. You make as much money as you can, only spend what you can afford, and things work out just fine. Right?
The problems in both the budgetless home and the budgetless business are the same. If you don't have a tight handle on what's coming in and what's going out, you don't know where you could be saving, where your money drains are, or how you can quickly compensate for sudden unexpected expenses. And you certainly can't plan for growth if you don't know where you are today.
Use a budget to predict needs and results, determine and adjust goals and implement strategy. Use your budget to keep score, to tell how well or poorly you're doing compared to how you planned to do, and to make necessary adjustments in a timely manner.
"A small business has a greater need for budgeting than its mid-sized or large cousins because a smaller operation often has limited resources and even more limited access to capital should an unforeseen crunch occur," said Ken Yancey, Jr., executive director of the Service Corps of Retired Executives (SCORE). A unit of the Small Business Administration (SCORE) advises small businesses on how to operate successfully.
"It's essential to maintain control and evaluate performance on an ongoing basis, and a budget is just what the doctor ordered for that kind of task," said Yancey, former president of the North Dallas Banking Center. "Even if a firm is currently highly profitable, budgeting is still a good investment in time as the process stimulates planning for new products, methods and services to keep ahead of the competition."
Want to learn more about budgeting your income for your business? Just pay a visit to www.toolkit.com.
Are there budgeting tips you would recommend to small business owners just starting their own business?