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Budgeting isn’t a sexy topic, but sticking to your small business budget is pretty important subject for small businesses. Especially when most are forced to work within the confines of some pretty tight numbers.
Here’s Why Your Business Need a Budget
Like it or not, setting a budget is one of the most important things you’ll ever do as a business owner. A budget is a guiding force that allows you to make sense of what’s going on around you. But what are the specific reasons for needing a budget?
Here are a few:
Budgets create targets.
When a pitcher throws a baseball, he isn’t just winding up and hoping it finds its way into the strike zone. He’s looking at home plate and throwing based on a combination of factors, including the placement of the catcher’s mitt. Just as a catcher’s mitt creates a target for a pitcher to throw at, a budget gives your business something to aim for.
Budgets establish priorities.
When you have a budget in place, everything your organization does suddenly has calculated meaning attached to it. If you ever find yourself in a position where you don’t know how to proceed or what to spend money on, your budget acts as a guiding force and clearly outlines how your actions should be prioritized.
Budgets communicate priorities.
Not only does a budget establish priorities for those in executive leadership positions, but it also communicates to everyone in the organization what your company values. In other words, if your budget is heavily focused on sales, then it’s clear to your employees that the number one goal is driving revenue. If the budget is heavily focused on employee training, then this sends the message that the company is focused on investing in talent.
Budgets get everyone on the same page.
It’s often difficult for everyone in a large organization to get on the same page. A budget makes this process easier by clearly outlining what the business is focusing on and what role each department or individual plays.
Budgets provide a measuring stick.
While budgets are great for getting everyone focused and moving towards a specific goal, they’re also excellent measuring sticks. At the end of a quarter or fiscal year, you can look back and get a feel for how things went over that period of time.
The importance of a budget can’t be overstated. While there are plenty of other responsibilities you have as a business owner, almost every single one of them is related to the budget in some form or fashion. Mess this aspect up and you’ll put yourself in a compromising position.
6 Practical Tips for Actually Sticking to Your Small Business Budget
While setting a budget does take some skill and attention to detail, anyone can do it. All you need to do is track your revenue, account for expenses, and then spread out the money according to where you want it to go. But while the budget creation process happens in a sterile conference room or Go to the full article.
Source:: Business 2 Community