Why Your Business Needs a Budget
Budgeting, a dreaded “B” word. You might have flashbacks to your parents telling you that you couldn’t do something fun because it “wasn’t in the budget”. Who would want to have a budget after that? People who have budgets don’t seem like very fun people. But budgeting, both for your household and your business are essential. Here’s why.
A budget gives you freedom
Having a budget sounds restrictive, both in your personal life and in your business life, but it gives you freedom. You now know exactly how much you can spend in a certain area, and you can spend that guilt-free. No more wondering if you can afford to hire that virtual assistant, or if there’s room to sign up for that cool new piece of software. You know exactly what you can spend in each area, and that’s true freedom.
Planning for large expenses
Owning a business comes with all kinds of expenses. The smaller monthly expenses and the large infrequent purchases. So how do you deal with making a large purchase? Will you be able to afford it? When you’re consistently budgeting you can start setting aside money each month to allow you to make those large purchases. No more sweating over whether you’ll be able to afford a new computer when your current one crashes. You’re setting aside money each month to buy a new one when it’s right for you and your business, not when it’s an emergency.
The number one thing that puts small businesses out of business is a lack of cash but when you’re planning and setting money aside you’re reducing your risk of going out of business.
Checks for business feasibility
Does your business make sense from a financial perspective? Can you sell enough of your services to cover the cost of providing those services? Having a monthly budget helps you more easily see if your business is feasible.
It might be that the number of clients you need to cover all your business expenses is way more than you thought, or that you need to charge more. Or maybe you need to trim down on your expenses. All the things you need to know but can’t figure out if you don’t plan. You’ll just be wondering along, trying to figure out why your business doesn’t seem to be working. Make a plan and know that you can make your business work.
Budgeting for your business gives you a level of freedom that you’ll never truly understand until you give it a try. You’ve got nothing to lose give it a try.
Need some help with where to start? Check out my quarterly professional review where we comb through your bookkeeping with a fine-tooth comb, we get you set up to start budgeting for your business quickly and simply. Go here to learn more.
