This advice might seem worn out, but apparently we can’t say it enough: small businesses need official budgets!
In fact, 61% of small businesses surveyed by business analysts at Clutch did not create a formal budget this year. That’s surprising, isn’t it? It seems as if creating a budget would be common sense, but some entrepreneurs neglect doing so for many reasons. They may say that they don’t have the time, resources, or the know-how, but that isn’t true. Creating a yearly budget will save you time in the long run and isn’t nearly as difficult as you think with the right tools and resources.
Let’s discuss why having a budget is so important:
Creating a budget is integral to building a strong, healthy small business for many reasons. For example, setting a budget makes it easier to establish and accomplish goals. If you don’t know where your small business’ money is going, how can you rationally plan anything as a business owner? Not only does creating a budget make it easier for you to envision what your business does going forward, but it can also help you determine whether your goals are feasible and communicate with your employees the direction that your company is taking. Instantly, planning is easier and possible.
A good budget and business plan can help you better react to unforeseeable circumstances that come day-to-day. If you can handle controllable variables, such as finances, it will be much less difficult to adapt and respond to various problems or even successes that your business will experience. When your business is going through a low period, you can find ways to cut your budget to make ends meet. When your business is flourishing, you can look to better invest your money back into your business or the market. Either way, having a good budget allows for you to make business decisions that will be better, faster, and more informed.
Last but not least, having a good budget makes for easier tax preparation. In order to make a good budget, you must have kept thorough, comprehensible records of your business’ finances. These days, being diligent about your finances is easier than ever with accounting softwares like Xero and Receipt Bank. Those companies are just two services that we have found to make daily financial processes almost effortless.
Ultimately, making a budget takes some effort upfront. The benefits of a great budget, though, will save you time, energy, and pain in the future when faced with any unforeseen circumstances or big business decisions, and your budget will certainly make processes easier come tax season.
Considering finally setting a budget and need help? Let’s get you in contact with an Account Manager today!