The answer to the above was for many years, me.
If you read my book “Financial Independence for Women”, you know that anything that had to do with money, budget or any type of numbers would scare the hell out of me.
I always used to feel small, stupid and insignificant when it came to money management, business budgeting or any of the stuff that had to do with money.
Can you recognize this pattern?
It’s like you know it is important, you know that if you want to have a successful business you MUST put attention on that side of business, but each time when you look at financial reports, cash flow charts it feels as if you’re reading a strange language. You can read the numbers, but have no clue what it means.
This was true for me too, until one day I decided, “enough is enough”. I realized that I don’t need to depend on someone’s else “language” I can create my own language, which would make sense to me and would help me navigate my business in the right direction.
I decided to create my own rules and tips that would help me run my business with more ease and efficiency.
Here are my top 10 tips of business budgeting
1) Maintain clear, accurate records. Business budgeting can only be done when transactions have been recorded properly. Keep your books clear, up to date, and in one place. This won’t just help your budget—it will make things easier for you at tax time as well.
2) Start with the overall view. Whether you are budgeting for the day-to-day operating of the business or a large project which in the works, begin with the big picture. Set goals and map out the route to get the job done.
3) Define certain areas of the business. Budgeting is not always about how much things will cost you. You can plan for revenue goals and then focus on the costs of goods sold before budgeting for overhead expenses. Spend time concentrating on each area, and focus on minimizing costs to increase your profits.
4) Work with percentages as well as euro figures. Meaning, sometimes its better to set the goals in how much percentage you want to earn, or cut costs in, then what would be the total revenue or profit. Maintain a budget (on computer or paper) that details both of these things. This will help you to maintain the structure of your budget when the figures vary.
5) Be realistic. I’m known to say, “ Dare to Dream and dream big”. However, if you sold 20 custom dollhouses last year and you wish to sell 2,000 this year, you will need to change your whole business model to reach that goal.
No point in setting a hugely higher goals unless you change your whole business model. That’s the reason I’m saying be realistic. Budgets are only useful tools if the goals and estimations are realistic. By all means forecast and be motivated for growth, but if you didn’t figure out the way to reach those goals don’t set them in the first place, as you are setting yourself for failure.
6) Sharpen and refine your budget constantly. Business budgeting is fluid, and most businesses will have to update or sharpen their budgets monthly at a minimum. Some may need to do so weekly. Find out what you have time for and what works best for your business, but stay on top of it.
7) Compare budget figures to actuals on a regular basis. When you are at the sharpening stage, be sure to line up the budgets and actuals from the previous period. This will keep you informed and grounded, and allow you to work with actual figures, not estimates.
8) Share your budgets with the appropriate people. Whether that is your bankers, investors or accountant, presenting a budget shows forethought and planning. Keep copies handy for when they are needed. Business budgeting is a part of any good business plan as well, so set aside some time to create your budget if you are working on your plan.
9) Maintain a database of past budgets. When the new fiscal year rolls around, don’t delete the old budget. Use it to help create accurate forecasts, to compare growth over time and as general information on your money management. Keep all of your past budgets together in one place, file or software so that access is simple.
10) Obtain help where necessary. Educate yourself through courses or books, ask for professional advice from your accountant/bookkeeper or work with a trusted mentor to develop your budget. Learning this useful tool will be beneficial to your business in the long term. Although the task may seem difficult to some, your day to day routine will run more smoothly when you follow these business budgeting tips.
Now I’m curious…
How do you take control over your business financials?
Share with us in, the comment box below, your tips, experience and ideas of how to keep track on your financials?
As a thank-you gift I will send you a video about Know Your Numbers from the course “Women Do Business Differently”
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