Why your Business Needs a Budget and How to Get Started

By April 30, 2020 Business Advice
Budgets

Whether you own a business or run a household, budget planning is integral to fiscal well-being.

But, why is a budget so important?

Targets your Priorities

A budget isn’t a secret; it can offer a way of targeting, and then setting, priorities for your business. Typically, these priorities are related to cash-flow, and how you will spend the resources that you currently have. It also demonstrates to all the members of your team what to focus on; for example, if the budget relies on customer sales, your staff know that sales are key. If the budget puts emphasis on hiring talent, staff can focus efforts in this area.

Provides Goals for your Business

Furthermore, a budget gives your company, brand, or team tangible goals to reach for. There can also be a sense of solidarity among the staff and team when they are working toward common missions.  

Creates Common Ground

Speaking of common missions, a well-laid budget also creates common ground among those working for and with you. It can be tough to get everyone to work together collaboratively, but a budge can outline the roles of each member, division, and department of your company, as well as provide answers to what everyone should be focused on.

Serves as a Tool to Measure

A budget is an important tool to measure your company’s success, as well as its shortcomings. A budget provides a common language- money- that each member of the team can understand and use when discussing how things are going within the organization.  

Tips to Get Started

So, how do you get started working out a budget? There are some pragmatic tips that can help but know that hiring a bookkeeping and tax professional makes the most sense.

Some things to keep in mind when formulating a business budget include:

  • Be flexible about expenditures, but also realistic about the numbers.
  • Make everyone accountable for overages within the budget.
  • Garner input from other departments and team members regarding the budget.
  • Revisit and evaluate your budget often and plan on making changes and modifications routinely, as needed. Nothing is set in stone.

Among all the tools that you have at your disposal, a budget is perhaps the most important of all. Everything that an effective leader or owner does relates back to a budget in one way or another; make sure that you have a concrete- though flexible- budget in place and that every member of your team has access as well as an understanding of it. It merits reminding that failure to maintain a budget can compromise the fiscal health of your business- compromising the jobs of everyone on the team.

Got questions about your business’ budget? Talk to the financial experts at Orcutt & Company with two locations. We specialize in serving the needs of small businesses, providing monthly accounting, bookkeeping, tax planning, and payroll services to keep your budget on-track and current. Call us to learn more.