Why you should budget when you set goals.
Posted on 11 February 2010
Budgeting, that’s a bad or swear word for many people. Yuck!! It even tastes bad when you say it buudddgggettttt……Most small business owners don’t budget and they sure don’t ask their accountant to help them. Almost all small business owners think, “this year I am going to make more money”. Then year after year they just maintain.
Time to change that record and it’s time to achieve the goal. Budgeting will ensure you make it. That’s right, I said budgeting will ensure you make it. Some things need repeating because they are so unbelievable.
What it a budget?
A budget is a financial forecast detailing the monetary resources that are required to achieve your target. Budgeting is using an educated guess on how much it will cost to make the goal and when it is required.
Some of you may provide quotes or estimates for the work you perform, this is another form of budget. The person who requires your services has a budget and they have to ensure your costs are within that budget.
Why is it a critical part of reaching your goals?
When you set goals, they must be “specific”, “measurable”, “achievable”, “realistic”, and “timely”. A budget proves the “achievable” and “realistic” portions of the goal. You must have the ability to set aside sufficient money to achieve your goal. You must know you can afford the goal you have set. Knowing will give you more confidence to succeed!
If you decide that you are going to increase your customer base through advertising, you must be sure you can afford the cost of the ads. You must set this money aside or at least be sure you can pay it within the required time.
What is the easiest way to budget?
Microsoft Excel is an easy to use tool to create a form with time across the top and costs along the side. List the months or weeks across the top and list each expense item down the side. Then place the appropriate amount in at the cell below when you will spend the money. You can total all expenses at the bottom and then add up the row for a total budget cost.
Now that you have estimated your cost you can look at last years income and expense statements to see if you can afford to buy these ads. This is the realistic part.
Is that it? Can it be that simple?
You are correct, it’s not that simple, I have left out the calculations on the revenue side. To keep this post reasonably short, I will have to discuss that in a future post. With the tools I have given you here, you can ensure your goal is “achievable” and “realistic”. The other parts of goal setting are about being clear and knowing when the right time is.
You can do anything you decide to do. That includes learning to use new tools in your small business that lead to success. Try this once, you will never guess about achieving your business goals again. Budgeting is an important part of your long term success strategy. So set some goals, plan on your success and enjoy the gains!
On your team,
Mark
2 responses to Why you should budget when you set goals.
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goal setting is sometimes difficult but it should always be done “;*
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