How’s business? Are you happy with it? Are you better off than you were in at the beginning of the year? Are your relationships more rewarding? Is your bank account bigger?
“You may delay but time will not.”
You have an opportunity to create the life you want starting right now. It’s time for the “B” word. “B” stands for goal setting. “B” stands for planning. “B” stands for…BUDGET.
And it’s time for you to get over your “B” word problem. You know you are supposed to put a budget together, right? Have you? Have you lined up this year in numbers and dollars? Have courage. I’ll help you. I have struggled with this. I learned how to budget only because I HAD to. And so do you. If you don’t set goals and measure your progress, your business won’t get any better. It will get worse! Yikes! Together, we can get through it. Here are some tips for putting together your business budget for this year…and beyond.
- Start…by stopping. Stop whining about budgeting. Stop claiming you can’t do it. Stop claiming you don’t get it. Budgeting is your best guess at what you can do for sales and expenses for a future period of time. That’s all.
- Don’t worry about doing it just right. You can’t do it 100% right, meaning you will never guess exactly what you will have in sales and expenses. You can’t do it wrong. Any swing at doing a budget is a positive move.
- Realize your power. You are incredibly powerful, so much more so than you realize. Writing your goals, crafting your budget, actually sets your goals into motion. You have everything to gain and nothing to lose by budgeting. So, let’s go!
Tools to use…
- Your accounting program probably has a budgeting program in it. Use it. It will do the math for you.
- Columnar pads are your friends. You know those green tinted sheets with the rows and columns inked in already? There is nothing wrong with using a pencil and paper to work out your budget.
- Print out your Income Statement (aka Profit and Loss or P&L) from the last two years. If you don’t have them, find your income tax returns. Your tax preparer created an income statement for your tax return. You can also have your check book register handy.
Basic Budgeting Steps…
- Create a reasonable chart of accounts. The chart of accounts should reflect YOUR business. Your accountant may encourage you to use his chart of accounts. Doing so makes it easier for him to do your taxes. He should accommodate you and your business by helping you create a chart of accounts that is cleaning business specific.
- Find a Budget Buddy. Doing your budget with someone else is a GREAT idea. Two sets of eyes will catch more math errors. Two brains will help you think out your assumptions. And, making an appointment with another person to work on the budget will discipline YOU to keep that appointment. Budgeting is easy to blow off because it’s not an urgent activity. Who should be your Budget Buddy? Another business owner is good. You can also work with one of your employees on the budget. Don’t be afraid to share your financial information with a key employee. Their financial literacy makes them more valuable to your organization.
- There are two ways to approach the sales line of your budget.
- Set a sales goal… and work from there.
- Fill in all your projected costs, and then see how much sales will have to be to cover costs and leave your desired profit.
Either way is OK. If you start with the sales line, and there is not enough on the top to cover all the expenses you anticipate, you can go up to the top line and change your budgeted sales to make it work. Remember…the Budget is pretend. It’s a guess. You can move the numbers around.
- Work your way down the list of costs and make your best guess. Reference your income statement, tax returns and check register to see how much you have spent on expenses in the past.
- Be generous with your expenses. Put in lots of money for you and your team. Put in dollars for Customer Satisfaction…the extra things you do to make things right (flowers if you show up late, carpet cleaning if you make a mess.) Put enough money in so that you can make a few mistakes – you will! – and not be resentful when you have to make a wrong…right.