Small business owners are some of the most resourceful people I know because they have a knack of making something out of nothing. If they are unable to master this technique they often fail and go back to work for someone else.
As a result they are reasonably spontaneous and take each day as it comes, knowing that within the next month or so they’ll need to make changes to their business just to keep up.
So when I first talk to them about a budget I get comments like:-
“Why waste my time on something that’s going to change anyway”
“My accountant told me to do one of those once but I never understood why”
“I don’t really use my current numbers so why spend time trying to predict the future”
So to get off base one we have to find a reason to even do budgeting worksheets!
So let’s take an example.
You want to go on holiday. Now how would you go about getting ready to go on holiday?
Would you wake up in the morning, put a few clothes in a bag, put the bag in the car and start driving?
This might really excite you but for many people this would be the best journey to a nightmare holiday because
a. you would never know if you had the right clothes
b. you would never know if you had the right bag and
c. you would never know where you might end up
Going on holiday for most people requires SOME planning. Now different people go about organising a holiday in different ways.
For instance, there are people who plan every last little detail of every day and then there are others who plan very little so they can have maximum flexibility but everyone at a minimum plans the time off for a holiday. Otherwise on the appointed day they would get up and continue going to work. At a minimum they plan what they going to do even if this is NOTHING.
Now let’s assume that you’re going on holiday with 2 other families. Do you think that it would increase or decrease the amount of planning required in order to have a good time?
Obviously with more people comes more options to be considered and the more planning that’s required to make things successful.
Now think about your business. How many people are involved? Not just the employees, but customers and suppliers as well. How much planning do you think is required to make things successful?
The obvious answer is that you will need some planning.
Budgeting is only another word for planning the future. So budgeting doesn’t need to always be a twelve month period although many accountants would suggest this given they work to a tax year and most of their work revolves around a successful twelve months.
Budgeting could be for the next day, the next week, the next month or even the next year. The whole purpose of budgeting is doing some planning for the future which helps the business owner be more successful by making best use of their resources
Using budgeting worksheets is only planning the numbers for the future activities in your business and the best part about it is that you can then show other people and get them to help you achieve the results. If you never show the worksheets to others then they’ll be shooting in the dark trying to help you!
How do you go about your budgeting?