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As a small business owner, I understand that you most likely did not get into business to look at budgets and cash forecasting reports.

You probably would rather chew paper than think about those words and I certainly would understand. Let’s start with defining exactly what both of these words mean.

According to Nerd Wallet, “ A budget is a way to balance income, expenses, and financial goals for a specific length of time.” I think of it as a roadmap for your business finances that helps you stay in control.

In the same spirit, “A cash flow forecast according to Business.vic.gov.au, involves estimating cash coming in and going out based on past business performance.”

Why Should You Care?

There are a ton of benefits to using these reports regularly in your business:

Resource Allocation
Financial Planning
Tax Planning
Cash Flow Management
Risk Management
Goal Setting
Cost Control
Performance Management

The list could go on but I think you get the idea. 🙂

There are numerous benefits to utilizing budget and cash flow forecasting reports in your business. It can help you to stay in control of your finances, make informed decisions, and help overall with meeting the goals you have for your business.

Keep IT Sunny~

What comes to mind when I say the word BUDGET?

It probably isn’t anything fun - right?

What exactly is a budget anyway? According to Zoho.com, a “business budget is a spending plan for your business based on your income and expenses. It identifies your available capital, estimates your spending, and helps you predict revenue. A budget can help you plan your business activities and act as a yardstick for setting financial goals. It can help you tackle both short-term obstacles and long-term planning.”

Now that we know what a budget means let’s look at 5 things to consider when creating a workable budget:

Practical Revenue Projections - It is great to aim for the sky but don’t aim so high that your goal is unattainable. It is a good idea to reflect on your industry trends, market conditions, market research, and your past history to develop your revenue projections.

Review your expenses - Are you aware of your spending habits and how they impact your cash flow?

Plan for an emergency - Do you have emergency funds available for your business? In the same way, you have a savings account with funds set aside for emergencies in your personal budget, your business budget needs the same contingency funds.

Pay attention - No budget plan is useful if it is created and ignored. Make a note on your calendar schedule to review your budget at a regular interval that works for you. This will help you to celebrate your wins and quickly get back in alignment if you are off-track.

I hope these 4 tips will help you to create a workable budget that makes sense for you & your business.

Keep IT Sunny~