Is a budget for your business really necessary?
I have had this conversation a few times.
‘Do I really need a budget? I tried before but I am never able to stick to it!’
You see, creating a budget is not about setting up the categories of expenses and sticking to them at all costs. Actually the categories only exist to help you.
When you are in the process of creating a budget you are effectively, as well as possible, predicting what you will need in the future in order to:
– keep your business running and
– invest to grow your business (being marketing, a new system or training)
By having the different categories it is easier for you estimate.
How much do you need for software?
How much do you need for travel?
What about support, professional services?
Are you launching a new program, how much do you need for Facebook Ads?
Or maybe you just promoting your webinar and being visible so people book discovery calls with you?
You get the picture, it is about being able to estimate each category as accurately as possible but don’t forget your income. If things continue as they are what will be your income? What would be revenue if you crate other income streams?
When you are creating your budget you have the whole picture.
You have your income and expenditure side by side and that is the point where you can make interesting decisions…
In this estimated scenario, are you making a profit?
If not what could you add in terms of income (More clients? More services)?
What is not essential and you could cut in terms of expenses? And you keep tweaking until you find the right balance.
The thing is, having a budget has a big impact the day to day of running your business, here is an example…
Not having a budget Vs. Having a budget…
Having a budget
It’s a networking event and you have a budget of £15 which is enough for to have couple drinks. You meet someone at the event, you get on well and they invite you to have dinner together afterwards so you can get to know each other better.
Your budget is clear in your head and you know you have £80 that was supposed to be spent on some graphic design for some changes in your website but that ended up not happening so that can pay for dinner.
You go for dinner and enjoy yourself.
The extra expenditure will not affect your profit for the month
Not having a budget
You have no idea how much money you have available. You know how much is on your bank account but you don’t know how much of that has already been committed.
At dinner and you order the cheapest possible option because you are afraid that you might be overspending and you wonder at the back of your head if it will be okay…
Not having a budget makes you walk on eggs all the time and minimal things cause lots of anxiety. Your money controls you as oppose to you controlling it.
P.S. Please don’t get attached to the amounts here. I am sure that £80 is plenty for some people and not enough for others.
What I’m pointing out to is:
– A budget protects your profit
– A budget puts you at ease
– Knowing your budget allows you to use flexibility to move things around because you know that what is important has already been planned by you in advance
For more tips on how to create a financial system for your business and a profit strategy join my Facebook group Women Who Master Their Money
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