Why you need a budget and how to make one

A Business Budget and Why It Matters

Although a business budget is one of the most important elements for success, over 50% of small businesses do not have a formal budget. 

With a budget, you can plan the best way to use your resources with your short-term and long-term goals in mind.  

A budget also clearly reflects your personal and company core values – your checkbook doesn’t lie. Your financial statements and budget paint a clear picture of your priorities and will communicate to customers, leadership and employees exactly what you value the most. 

Unfortunately, many new business owners procrastinate the budgeting process, and the consequences are costly. Building a business budget is a must-do prior to launching your business because without it, you won’t understand your business performance or be able to plan for the future. 

Here are some clear benefits of having a budget…

• Significantly contributes to the long-term success of your business
• Integrates your financials with your strategic goals on a weekly, monthly, and year-to-year basis
• Highlights trends in your business income and expenses– you can plan for seasonal “highs” and “lows” by tracking past expenses

• Yields effective financial tracking
• Allows you identify “surplus” finances that you can reinvest
• Predicts what it will take for your business to become profitable
• Estimates future income and expenses to avoid debt
• Makes it easier to manage and control the operational activities of your business
• Keeps you accountable in stewarding your business finances well– it helps you make sure that you are spending money at the right time and in the right places
• Drives important business decisions
• Allows you to notice places where you can cut back on spending or adjust specific budget allocations
• Allows you to clearly allocate community impact giving projects that are important to your Christian values, such as generosity, kindness and humility

3 Important Characteristics of a Budget

A Budget is a Continual Process

The needs and influxes of your company will constantly be changing–  as these things happen, you must update and modify your budget so that it is accurate and up to date.

A Budget Has a Goal

Your financial planning should be aligned with your broader business goals. Even as unexpected events happen that affect your business, a budget allows you to stay focused and helps redirect and reallocate your resources to meet your goals in the midst of changes and detours that are inevitable in the industry. 

A Budget is Written Down

If a budget is not written down on paper or put into a computer, it is nothing more than a wish. A budget helps you understand where your business is at and where it is going. A written formal budget increases your chances for success and it provides a guide to keep you accountable as you make important financial decisions for your business. 

Budgeting is part of planning for your financial future and one of the most important skills you can learn. 

By knowing in advance where your money will go and how it will be spent, you have more freedom to put your dreams for your business into action!

If you don’t have a budget app, program or clear process, click here to download our free annual budgeting tool.

“Budgeting isn’t about limiting yourself – it’s about making the things that excite you possible.”