If you hate budgeting, you’re in good company. Most business owners loathe this part of running their businesses. Heck, I’m a CPA and even I don’t like budgeting!
At the same time, I recognize budgeting for what it is and the immense value it provides. It’s a vital tool that allows me to effectively run and grow my business.
Maybe you dream of the day when you’ll open your bank account and find enough money to do away with budgeting altogether. Unfortunately, that isn’t reality for most business owners; and even when it is, the business owner still needs a budget to avoid squandering that money away.
It’s not about scrutinizing every last dollar spent. It’s about taking full control of your finances so that you decide where your business can go and what it can achieve!
The 11 Reasons Why I Keep a Budget
Why do I keep a budget even though I hate it? The truth is that budgeting helps me accomplish the following:
1. Make Sure I Collect My Receivables on Time
Budgeting gives you a clear picture of your current cash flow situation, as well as any outstanding receivables and how much cash you’re still waiting on.
2. Do the Work Needed to Keep My Outsourcing Clients Happy
Do you have clients that rely on work from you each month? Filling your work schedule and budgeting for outsourcing expenses will go a long way toward keeping them on board.
3. Track Pending Prospect Proposals and Their Effect on My Cash Flow
Are there high-paying clients in the pipeline? Having a budget allows you to track them and how their business might impact your business’s cash flow situation.
4. See the Result of Customer Prepaid Plans in Action
Prepaid plans can have a positive effect on your cash flow, and tallying this income in your budget can help you assess your current cash position and plan for the month’s expenses.
5. Plan the Workflow of My Extended Tax Return Clients
Business owners are well aware of the ebbs and flows of cash flow—particularly startups and seasonal businesses. For my business, it’s important that I carefully plan the workflow of clients needing extended tax returns; my budget allows me to do just that!
6. Estimate the Total Income of My Current Work
Your plate may be full, but are you sure that the income from your current workload will allow you to pay this month’s rent, payroll, and other expenses? Logging your income will help you determine whether you’re on track to meet your monthly income goal.
7. Track My Monthly Bills and Compare Them to My Actual Spend
A budget provides a baseline for your monthly expenses. Of course, it’s easy to let your spending get out of hand, so having the ability to compare your actual spending to your original budget will help you reel things in.
8. Identify Large Cash Expenses and Control Costs
Are you about to spend a large amount of cash? Diving into your budget allows you to see the impact of that expense and how it might alter your cash position.
9. Review Ways to Lower or Eliminate Expenses
With your budget laid out in front of you, it’s easy to see exactly where your money is going. If your total spend is too high, find creative ways to lower or get rid of some of your most disposable costs.
10. Foresee Future Cash Shortages and Plan Accordingly
Every business goes through the occasional cash shortage. Whether it’s due to a bottleneck in receivables or a major unexpected expense, budgeting can help you foresee these kinds of issues and allow you to plan.
11. Assess Business Opportunities and Their Effect on the Business
Like any savvy business owner, I’m constantly looking for new products, services, and partnership opportunities that could help grow my business. Of course, not every opportunity is a good one, so I use my budget to evaluate its impact!
Create Your Budget Today and Stick to It!
Building a budget might sound like an enormous chore, but it’s not. I usually dedicate one day at the beginning of the year to set up my budget and only update it a couple of times each year. That’s it—far from a large time commitment when you consider all of the benefits that budgeting provides.
Running a business is stressful enough without financial problems, so plan by building a budget and sticking to it!