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Business owners: Why do you need a budget & how do you start preparing your roadmap to success?

24/05/2019 by Pascoe Partners Accountants

Business owners: Why do you need a budget & how do you start preparing your roadmap to success?

 

Business owners are no strangers to being told about the importance of business budgeting and forecasting.

However, many have no idea why it’s so important; and even fewer know where to start with preparing a budget.

Most are too busy firefighting in their business to be able to take a breath and ask the most important question: “How can a budget improve my business?”.

Once the lightbulb is lit, the next questions to cross their mind are “Where on earth do I start?” and “Where will I possibly find the time?”

Each of these questions is answered below…

The importance of business budgeting: How can it improve your business?

Many business owners see budgeting as just something that the government does once or twice a year to prevent them spending too much.

But budgets are not about having to switch off the light at the end of the tunnel because there is no more money left in the pot to pay for it.

They are all about creating a roadmap for business success.

Here’s how a budget will help your business:

  • Planning and control of the finances. If there is no control over spending, planning is futile and there are no business objectives to strive towards.
  • Building a framework for your business and its finances. Combining past trends with a realistic forecast for the fiscal year, a budget provides a detailed view of assets, realistic revenue expectations, and how those stack up to the anticipated expenses. It will also help with setting goals and establishing priorities; and it should detail where funding will come from to execute new strategies, as well as how much revenue can be generated by executing these strategies successfully. Budgeting ensures that money is allocated to the things that support the strategic objectives of the business.
  • Providing valuable information – helping you achieve effective control of your business. You become aware of your weaknesses during the budget process and, through implementing effective control, you can overcome them.
  • Assurance that your business is sticking to the plan – and an important means of identifying problems and opportunities as they arise.
  • Helping you realise your dreams and goals, ultimately

Where do you start with a budget?

Now you know the importance of business budgeting, where do you start?

Running a business is like going on a journey; and every successful trip begins with the ultimate destination in mind. You must visualise your personal and business dreams.

Your personal wealth as a business owner is inextricably linked to the success of your business.  Surely you want a level of financial wealth and independence for yourself and your loved ones, like most business owners? What else?

Once you’ve decided on this, you can start to plan how your business is going to get you to that goal in the time you want to get there.

To start a budget, the most important things you need are long-term dreams and goals. It really is as simple as that.

This will enable you to focus on all the small steps along your journey that will bring you to your destination.

A business advisor or accountant will be one of your most valuable assets in this process, helping you determine the resources needed for the journey and ensuring you don’t run out of fuel before you get there.

Where will you find the time for a business budget?

You don’t have to do it alone! There are so many resources you can call upon to help.

The most successful business owners surround themselves with the right people to help them achieve their goals and objectives.

Your business advisor or accountant can help you calculate your profits, forecast your financial position, and determine the cash flow needed to make it all work.

Your buy-in as the business owner, and that of your employees, is critical to the success of any business plan. A talented advisor will hold you accountable for the budget process, which can make all the difference to your success.

With the help of cloud-based software solutions such as Castaway, Calxa and FUTRLI, to name a few, your business advisor can build a simple budget for profit, financial position and cash flow (a 3-way budget) within a couple of hours. And they can manage and monitor progress and help you make strategic plans.

So, the ‘not enough time’ excuse no longer works.

The future growth of your business is built on its present success. By planning and managing your success now with the help of a trusted advisor, you can scale expansion of your business funded by growth and avoid the common trap of over-expansion.

With a smart map for the journey, you’ll be ready to start out on the road ahead and be confident of reaching your destination.

Contact us here for help with drawing up your map.