Why Business Budgets Are So Important
Whilst business budgeting sounds like a snooze-fest to most, budgeting is our bread and butter. A solid budget is one of the key starting points to any business and it certainly shouldn’t be overlooked by sole traders or startups who take an exciting idea and run with it, before figuring the numbers out.
So, why is a business budget so important?
We talk a lot about goal setting and the figures help to create targets to work towards. Importantly, a budget helps to guide big decisions – can you actually afford that new piece of equipment or another team member or do you need to hold off for a couple of months? They allow for regular check-ins to see where you’re at financially and give you a point of comparison when looking at certain periods. A good budget also means that when you meet with your accountant, we have a great touchpoint to base our advice around. The more financial information you can get, the better.
Where should you start when creating a business budget?
Looking at your fixed costs such as wages and rent is an easy place to start. This review is also a great way to look at projected expenses and find places you might be able to save.
Look at your historical figures if you’re not a brand new business and see if they’re an accurate representation of what might happen in future. If you’re using Xero accountants already, this should be an easy task. Factor in upcoming changes that you see potentially unfolding.
Setting up a couple of different budgets to aim for is a great way to know what figures you need to be hitting in order to reach certain targets. For instance, do you know how much revenue you need to meet your expenses next month? And if you wanted to make a 20% growth in the business this year, what does that look like? These are all things we can help you figure out in our accounting and tax services too.
Is there a program or an easy way to record my business budget?
- PocketBook (more for individual budgets than businesses, but a good app nonetheless)
- You’ve heard us say it before and you’ll hear us say it again…Xero! It’s best to sit down with your advisor, make a budget and track it against your actual figures. You can read more about Xero’s budget tips here too.
- Float App
- For a simpler budget or for those of you that like an older school method, Excel and GoogleSheets are great too!
Who can help with a business budget if need be?
We can! Business budgets are absolutely paramount to the ongoing success of any business, but particularly small businesses where every dollar spent and earned is felt. We offer ongoing advisory in our fixed priced packages, or you can turn it up a notch with our virtual CFO service for those looking to outsource this area of expertise.
Either way, get in touch. We’d love to hear from you.