After hard work, many people believe that business success is down to pure luck.
In fact, what they call “luck” is often just good decision-making.
Now you might be scratching your head, wondering how on Earth good business decision-making differs from luck. Since no-one can predict what the future will hold, how can you possibly know if your decisions will turn out to be good?
By creating a business budget plan, that’s how!
What is a business budget plan?
Covering a specific period of time, i.e. weekly, monthly, or annually, a business budget plan will provide you with essential information about your capital, revenue, and expenditure.
Amongst other things, you will use your budget plan to record all of your fixed and variable business costs and expenses, calculate your profits, and estimate future sales.
A business budget plan is a living document that needs to be regularly updated. This isn’t quite as laborious as it might first seem however, as once your budget is up and running, it should be easy to make regular adjustments as you go along.
Plus, the huge benefits of having a budget plan in place will soon outweigh any time you spend on updating it!
Right at the top of the list is saved time – and money – that would have otherwise been spent on clearing up after bad business decisions.
How does a budget plan help business decision-making?
Your budget plan will paint a clear and truthful picture of your business finances.
When you have that, it can feel like a gift. Now you can set targets, foresee problems, and build an informed future strategy for the business you worked so hard to create, without feeling as though you’re stumbling around in the dark.
There’s a famous business management saying that goes: “You can’t manage what you don’t measure”. In other words, if you don’t know how your business is performing, then you won’t know what you need to maintain, correct, or improve.
By the same token, if you don’t know where your money is going, or how much is coming in, then you won’t know if you can safely invest in your plans for growth.
Budget planning helped my own business!
As usual, once New Year’s Day had been and gone, I created my business budget plan in early 2021, to cover the forthcoming financial year.
In doing so, I was able to understand not only the level of new business I needed to reach my targets, but also the type of clients I needed to get there. I then drew up a marketing plan, and set a budget that encompassed brand-new software, training, and external assistance.
My budget plan allowed me to see how much I could safely invest, without falling into debt. I was also able to take a guilt-free holiday, since I used my plan to analyse the best time to take off, and how much I could afford to spend.
You don’t have to be a chartered accountant to create a budget plan for your business…
…but it could help to speak to a friendly and knowledgeable one before you start!
If you agree, please contact me to arrange a complimentary Discovery Call.
