Do you create a budget for your small business every year? If not, you really should develop one. A budget is a spending plan for your business. It helps you estimate your business’s costs, revenues and resources for a specific time frame, so you’ll know if you have enough money to do the things you need or want to do with your business.
Just think of a budget as a road map toward the success of your small business through the management of your company’s finances.
Here are 5 reasons why it’s worthwhile to create a budget for your business:
- A budget helps you see the financial realty of your business. That way, you can decide exactly what you’re going to be able to do within the given year.
- It helps you forecast your cash needs. You can ensure you have the money for upcoming expenses. And you can create a plan to save for future needs, like hiring additional employees or buying a piece of equipment.
- It helps you control your expenses and make thoughtful business decisions. You’ll be more apt to only spend money on those items that are important for your business.
- It helps you avoid financial surprises. It helps keep you from going into debt – or worse, having to close your company doors.
- It helps you obtain additional funding from the bank or prospective investors. Banks and other investors will want to look at your budget, as well as your current financial records, to get a better understanding of your company’s financial picture. They want to make sure your business is stable with a thoughtful financial plan.
Now, that you understand why it’s important to have a budget, it’s time to create one. However, developing a budget can seem like a daunting task, especially if you’re not sure what you need to do or include in your plan. Fortunately, a solution to this problem exists – The Payroll Department. We can help you develop a budget for your business based on your company’s past financial performance while also looking at your upcoming needs. With our help, your business can stay on top of your financial plan for the future as well as take care of your day-to-day bookkeeping needs. Contact Teresa Ray at 317-852-2568 to learn more about our bookkeeping services.
-Ariane of The Payroll Department Blog Team