How the boring old business budget can make your company profitable

A boring old business budget can actually make your company profitable

Being a successful business owner means that you have a boring old business budget. It shows you took the time to find out what's making money and what's wasting money in your business, and you did something about it

For most business owners that insight only comes after some serious heartache and financial setbacks. It’s often when you had to claw your way back from the abyss of financial ruin with bruises and bumps from bitter disappointment that you began to look at your finances differently.

It’s only when you realised that you’ve been working and made some serious money but with nothing to show for it that you begin to understand the value of managing your money well. And that is where you start building your way to success. Because now you understand the value of money.

Not everybody who’s successful has suffered deep losses but for most entrepreneurs, it was those devastating losses that put them on a different path.

Building a business is tough and brutal. Don’t let anyone tell you it’s easy. It will be one of the hardest things you've ever done.

There are so many things that you thought you knew but it didn’t help that you knew them. And then there are things you wished you knew but you didn't. And those are the things that really would've made a huge difference in your business if you knew them.

When success comes you must be ready for it. And only you can define what success means to you.

Part of being prepared is to not let the money control you, you must control the money. It is intoxicating when after years of financial struggle and disappointment, to suddenly have more money than you’ve ever had in your life.

Getting that first big client can be both terrifying and liberating. You might even begin to think that you are invincible.

That is the moment when you might go on a spending spree, forgetting that the money must last at least until your next client. The one that hasn't materialised yet.

This is exactly the moment that cool heads are needed. And you have to stick to your financial plan.

Plans? What financial plans?! You thought you were running a business and having a financial plan was not part of the job.

Actually, having a financial plan is a big part of the job. 

If you plan, it helps you to be ahead. It helps you to be ready for the big bucks when it comes. A plan helps you to stay calm in the midst of all the excitement of finally having enough money to buy the stuff you’ve always wanted but could never afford.

It's the plan that will save you financially.

But it must meet certain requirements:

It mustn’t be complicated. 
It must be personal. 
And you must own it.

Most of the time you are building a business to provide for your families, through offering a service or selling a product, or both. You also want to leave a legacy.

You need to pay your employees, cover your business expenses, pay yourself and make a good profit at the end of the year. You also want to have cash available when a good business opportunity comes your way.

Your financial plan must make provisions for all these needs. There are some necessary expenses and some nice-to-have ones. And this is where budgeting comes in.

A business budget becomes your best friend. And you don’t have to do it alone. People like me are here to help you work out the best possible business budget for your business.

Don’t wait until you get your big client before you start planning your budget. Do your budget at the end of your financial year, even if you don’t know where your next big client will be coming from. 

A business budget will help you prepare for the next financial year and give you a clearer picture of how you can improve your finances for both your business and your personal life.

Ask yourself how much money are you going to need to pay the following business expenses for the first six months:

Salaries
Office rent
Stationery and printing
Cellphones
Electricity
Am I going to take a salary or drawings, and how much do I need to cover my personal expenses every month?
What are the manufacturing costs 
What is the cost of sales?
How much for tax liabilities

It will also shed some light on those hidden expenses that nobody pays attention to but eventually adds up to a substantial amount.

This is a very basic example of drawing up a budget. And once again, it’s a small part of the much bigger picture of running a business.

Part of the budget is also to project realistic sales figures based on proper calculations and not just hope, promises and sentiment.

You're still going to need the discipline to stick to the budget when you land your big client. Money has a way of making you so excited that you throw all caution to the wind, and forget about future business expenses and other important payments that must still be made.

Budgets sound incredibly boring and it can be as dull as mud to prepare if you’re trying to do it on your own. But with the right bookkeeper, it can be a very interesting and exciting exercise. It will help you to see where you're heading with your business, and where you can improve your spending.

Budgeting is such an under-utilised function of a bookkeeper and business owners should use this service way more often.

Don't look at your business budget as a punishment or something that's being forced on you. See it as one of the steps to having a profitable business.

It is one of the must-haves to help you to go from merely owning a business to having a thriving business.

It will also give you the freedom to spend your money with confidence and enjoyment because you'll know for sure that it's money you've planned on using. And it will help you to stay on track with your spending, especially when you take money from the business for personal use.

Having a budget is the first sign that you value your money. And once you value your money, it will reward you in ways that will surprise you.