Does your business use a budget? Having a budget may seem like a no-brainer, but you’d be surprised how many businesses don’t use one. Without a budget, it’s difficult to have a clear understanding of your financials and overall performance. If your business has struggled with budgeting and isn’t sure where to begin, you’re not alone. Make today the start of your budgeting journey with these simple steps.
Decide Your Budgeting Tool
To start a budget, all you really need to do is get it on paper, literally. Drafting a budget on a piece of paper is a great start if that’s what’s comfortable to you. Most beginners opt for a tool such as Excel to house their budget. Excel is a solid tool with templates and formulas that make it relatively easy to track and update expenses.
As you get more experienced with your budget, you may want to consider more robust budgeting tools, like Jirav, that offer a deeper analysis of your financial metrics and advanced reporting capabilities. The same applies if your business has rapidly grown or has plans for expanding — you may find that a simple spreadsheet is no longer sufficient and could be holding your business back.
Align Your Budget With Your Goals
Budget numbers shouldn’t be pulled out of thin air. They should always be a reflection of your business’s upcoming goals and priorities for a set time frame, such as quarterly or yearly. Whether you’re aiming to upgrade certain systems or want to add head count to a few teams, your budget should account for the top areas you want to invest in.
It’s also crucial to get other departments involved, depending on the size of your business. Each team will most likely have their own budget to follow, so it’s important to make sure everyone’s plans align with the overall vision and direction of the company.
Don’t Let Your Budget Become Stale
A great way to start your initial budget is by reporting on your financials from the previous year and using that as the basis. Be cautious though: many businesses fall into a rut of using their previous year’s financials as the baseline of their budget each year without looking for ways to improve it. Once you’ve gotten more comfortable with budgeting, it’s recommended to further analyze the trends you see in your budget and explore new reporting metrics to optimize its impact on your business.
There are countless insights in a budget for businesses to tap into to shape their strategy. If an area is severely overspending, that may signify deeper performance issues or inefficiencies that need addressed. The reverse may be true for areas that underspend. Eventually, you may choose to set up your budget to track revenue by a team or employee and use that data to determine how to allocate future funds. No matter where you decide to focus your attention within your budget, it should be reviewed and adjusted every year to meet the changing needs of your business.
One of the most challenging aspects of budgeting is simply getting started. Whether you opt to use a basic program, like Excel, a robust software option or even the back of a napkin, a budget is only useful if you put effort into it. Wherever your business is in its budgeting journey, whether you need help getting starting or are looking to maximize your budget, Creative Planning Business Services can help.
Our outsourced accounting team partners with clients to elevate their financial processes and maintain their budgets. We also offer opportunities to leverage technology that can take your budget to the next level with innovative dashboards and reports. If you’re interested in learning more about our outsourced accounting services, schedule a meeting with our team today — we’d be happy to discuss them further with you.
