Budgets…they’re boring…a waste of time…never pan out…they’re just for big corporates, not owner managed businesses…
Just some of the excuses I hear when I ask why budgeting doesn’t get the love❤️ it deserves. In fact, budgetting is one of the most powerful tools around for developing your business ideas and increasing the probability of turning your ideas into reality.
👎🏻 Budgets are boring
Is developing your business ideas and goals boring? Budgeting crystallises your thinking by forcing you to focus on and quantify the £ financial impact of your ideas. It moves your strategic planning from v1.0 to v.2.0
👎🏻 They’re a waste of time … and never pan out
Firstly, they aren’t supposed to be accurate. If you need absolute certainty in your life, you shouldn’t be a business owner.
However, if the exercise is too painful, or the results grossly inaccurate, that’s probably because you don’t have a solid grasp of your business’s financial mechanics. In that case you’re not wasting time, you’re investing it to deepen your understanding of your business.
How do you do this? By putting together a budget, even if it’s time consuming and you aren’t confident it’s robust enough, then monitoring how things actually turn out and analysing the variances. The lessons you learn during that analysis will be invaluable and lead to genuine insights into your business.
👎🏻 It’s just for big corporates
Budgets bring direction to your entire team, so you’re all pulling towards the same clear, unambiguous, goals. That’s just as true for a smaller owner managed business as it is for a FTSE 100 PLC.
If anything smaller businesses need that clear lodestar⭐️ more than a large corporate does. Growing a small business is tough, you’re buffetted by market forces far more than larger businesses, and, typically, founders have a 100 things on their to-do list that they aren’t experts in and don’t have anyone to delegate to.
Your budget helps provide clarity and focus about what you need to do to stay on track.
👍🏼 Convinced it’s worth the effort?
If I’ve changed your mind, and you want to give budgetting a try – here are two things you can do to create a better budget:
1. Check out my free guide to cashflow forecasting. Budgetting and forecasting are very similar activities, so a lot of the steps I outline there can be applied here.
2. Get in touch for a free strategy session. I’m always happy to discuss people’s business plans and give some tips about how to turn them into a fully fledged budget for the year ahead. Or, if it turns out we’re a good fit, you can always become a client and get much more substantive help!
I help tech entrepreneurs build more profitable and strategic businesses so they can scale smarter | Virtual CFO and Founder of Oxwich Accountancy