Why do I need a budget?
Knowledge is Power
You might be able to run your business without a plan but you will not be able to effectively and efficiently run your business without a working budget. If you do not know how much you can afford to spend on marketing, employees or expanding operations, you could paralyze your business or over spend. Budgets can show you how healthy the business has been the last year, as well as give insight on projected expenses for the coming year.
Is your projected budget on target with your actual input and output? If you do not have a baseline for the company, how will you know how well the company is doing? Is the company doing better than last year? Are your employees helping your company? How do you know without a working budget? You don’t!
Compare projected forecasts with the actual numbers. It is imperative that you revisit the business budget regularly to evaluate the numbers. Did your planned figures diverge from the actual numbers? Once you have compared anticipated spending with actual expenditures, you can assess how your business is dealing with larger social forces, such as seasonal sales variations, the country's economic situation and local issues. Use all that information to improve your business and create a more accurate budget for the next period.
Once all the expenses are detailed in your budget, reevaluate each one and determine whether anything can be reduced. Are there better internet services or cheaper office supplies? Are there areas of your business that deserve more resources? Be flexible with your budget. It is a business tool, a guideline to help you make informed decisions concerning your business.
Want to be able to see how your business is doing at any given point in time? Contact Vicki at Quality Accounting Solutions to get QuickBooks set-up for your business or to analyze your budgetary needs.