Some small business owners don’t see the need for a written budget while some have a budget but never look at it once it’s done. Other businesses, perhaps your competition, have a written budget and use it to run and operate the business more efficiently. The last quarter of the fiscal/calendar year is not the only time to think about a budget. Almost every business owner “knows” their business needs a formal budget to help guide them in the coming year and some feel guilty that they don’t see the real value in preparing one.
Yes, everyone knows it’s great to have a written plan outlining how much you expect to spend next year and what you think your revenues will be. A written budget is just that plan. But the budget process is much more important than the final document.
Notice I said the “budget process”. It’s the process of planning that brings the most value to you and your business. Done properly, budgeting forces the business owner to really think about such topics as:
- What do I think my competition’s going to do next year? Are they growing faster than us? If so, why & how?
- Even if I’m growing my revenues, what’s happening to my market share? Is it going up, down or staying the same?
- Can we really afford to keep doing “business as usual”?
- Will I need additional financing for working capital or operations for next year?
- What clients/customers/product lines are really the most profitable, and which ones do I need to get rid of?
The budgeting process does not occur in a silo, it involves other people besides the business owner(s). Including senior leaders (and others) in the discussion gives them a stake in the outcome and can lead to unexpected and pleasant improvements and results. The old saying “two heads is better than one” is true in this case, other people have good ideas, too.
Preparing an annual budget is not just a “check the box” activity; it can really help drive your business to a higher level of performance and profitability.
B2B CFO® Partners are experienced in budgeting and forecasting and implementing appropriate programs changes that will strengthen the overall financial condition of the company. Management of and assistance with the budgeting process is another example of how we reduce stress on the business owner and allow the him/her to focus on business development and other critical activities that add value to the business.
If you would like to discuss Budgeting and how it can help your company, please contact me by e-mail at email@example.com or by phone at 704/651-2216.
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