5+1 Reasons your business should have a budget (0% maths required to read this article...)

Creating a business budget could be one of the most valuable things you do all year! Let me convince you why…

TL;DR / Summary

You absolutely need a business budget to be able to make informed business decisions and steer your company to success. A budget gives you the next level of control over your businesses finances that will reduce your stress as an owner and help avoid putting stress on your business as a whole.

1. Get the truth of how things are actually going (Scary stuff 🫣)

There’s money in the account so everything's fine right? But if you were heading for troubles down the line would you rather know now so you can do something about it?

Creating a budget using your business's past financial info will give you an insight into the financial health of your business and how successfully your model is working. The way you find new business, how you structure deals, how (and when) you get paid, your team and the resources you use are all adjustable variables and can drastically alter your businesses trajectory - What has been working so far and what could be improved?

2. Predict & Prepare for upcoming challenges

‘I foresee something beginning with T will carve a chunk out of your profit at the end of the year’ 💸- Your crystal ball for predicting the future 🔮(Your new budget)

A budget at its core is about allocating spending and ensuring that there is enough to go around. Your budget will show you where to expect hardships or changes in outgoings that might require a little extra kept aside in preparation for and save you a great deal of stress in the process.

"A budget is telling your money where to go instead of wondering where it went" - John Maxwell

3. A roadmap to achieving your goals

A goal isn’t just about more profit  - what about opening that second location? Developing that new product or even retiring/selling up?

A budget is going to form the path to get to where you’re going as well as a way to measure if you are continuing in the right direction. You now have the opportunity to channel your hard earned revenue into the areas it’s going to have the greatest impact towards reaching your goals!

If everything carries on as it has been, where will you be in a year's time? On track to achieving your goals? - If not, what needs to change to get you there?

“A goal without a plan is just a wish.” - Antoine de Saint-Exupéry

4. Control spending

‘Sorry Jimmy-boy I really wish we could buy you that, top of the range, spinny chair with the flashing lights but it isn’t in the budget this year’ 🙃 - Better luck next time Jim. We don’t just spend money willy-nilly anymore.

Your budget can act as the guardrails to limit spending that isn’t helping to move the needle and provide an opportunity to identify ways to SAVE MONEY! During the process of creating budgets for the first time for a business I always find savings opportunities: From subscriptions that have gone unused to multiples of repeated purchases that could be bundled into bulk orders, plus many more, that can easily 10x return the cost of the time put into creating a budget.

(If cost reduction is an objective for your business, why not schedule a conversation to help you identify opportunities... )

5. Create Scenarios

Let’s play ‘what if’ - e.g. If you said yes to that new project but then had to hire an additional team member to deliver it, would you actually be better off?

Well grab your magic 8 ball (🎱= Your new budget) and make a copy where you change all the figures that would be affected by the potential change. Will your profit actually increase?... ‘It is decidedly so’ or ‘my sources say no’

Additional budget scenarios can empower your decision making and de-risk new projects/initiatives. Combining your industry knowledge and expertise with the financial data in your budget will create such clarity it will have you asking: 'why haven't I always been doing this!'

Bonus 1: Finance opportunities

You: ‘Show me the money’ 👉

Investor: ‘First hand over your budget’ 👈

If a time comes in your business journey that you are looking to raise funds from investors, for any reason, you’ll need a budget to demonstrate your businesses past, current and predicted futures financial performance. Starting now helps lay the foundation for this possibility.

So what do we think?... Creating that Business Budget is looking pretty damn handy now, right?

If yes, I imagine your next question is… How do I create a budget for my business? - Well get in touch and I can share a template to get you started...