Budgeting is alive and it is everywhere from federal spending all the way down to the cities we live in and organizations we work with on a daily basis. Although budget is not a four letter word, it is often treated that way.
- Keep it Simple. Don’t over complicate things, it is a estimate of where we want to be at the end of a given period.
- Review and Consult. Review the history and consult with others – your business partner; key staff members; trusted advisors. Getting another set of eyes on the budget will help our staff buy into the budget.
- Keep it Real. Be realistic about profit, expenses, sales and asset use. Being honest with ourselves about what is likely will be key – NOT what we really would like.
- Be Thorough. Include all necessary information — fixed costs, direct costs and overhead. Don’t forget to budget owner compensation, marketing and any interest changes that may affect the bottom line.
- Be Flexible. Since the budget is based on historical data and best guesses of the future, realize that unknowns can happen. Budgets will need to be adjusted when markets and economies dramatically change. Otherwise, use it is a guidepost to help reach the goals.
A live, working budget will help a business stay on plan and on target for the future vision.