Are you beginning to plan out your budgets for 2020? Have you allocating enough money for the growth initiatives you have planned? Creating a budget that helps you manage cash flow and achieve your business objectives is a very important component in enabling growth for all small business owners.
Budgeting is an essential process that small business owners can utilize to help them plan and forecast future revenue and expenses. Doing this allows you to make sure that enough money will be available to keep your business running, improve your competitive position in the marketplace and achieve your growth objectives.
Creating an accurate and reasonable budget enables forward-looking planning and also allows specific financial targets to be set. Revenue budgets are an annual forecast of what will be sold, billed or collected. Every small business owner wants to grow sales, and it is not uncommon for them to arbitrarily set a revenue budget that is a certain percentage higher than the previous year. If they are not investing in sales improvement initiatives, this may be hard to come by.
Maintaining the budget throughout the year is also very important. Identifying over and under-performing areas, both on the expense and revenue side, will allow you to adjust budgets before they are “out of control.”
Creating and maintaining financial budgets is the cornerstone of managing a small business, maintaining cash flow, measuring performance and avoiding surprises. Spending the time to manage budgets will help you to more successfully grow your small business.