Five Steps to Create a Budget for your Small Business
How I hate budgets!
Every time an accountant told me to put together a budget for my company, my response was – When I get the time I will! I just never seem to get the time.
For several years when I first started my company I never paid attention to a budget. I knew if I made money by looking at my financial statements and that was good enough for me. Also, every time I tried to put something together I never compared my actual financials to the budget numbers I created.
Two years ago, I decided to take a different approach. I developed a forecast for a quarter of what I expected income and expenses to be. I came up with the figures based on the previous year’s actual numbers. It was easy to look at last year and just add a percentage increase to the numbers. Then I took the time to review once a month the forecast with where we were at that point.
By using this system of creating a forecast and comparing that to actual financials on a monthly basis I was able to focus on income areas that were falling behind and stop expenses that I didn’t need to make.