3 Reasons Why Your Business Needs a Budget
The new financial year is a great time to put in place or revise your business budget. For many of us, the word ‘budget’ implies we need to go without, rather than what we can achieve.
For a successful business owner, the word ‘budget’ has a very different meaning. It’s an outline of where you want to take your business and what you need to achieve to get there. Running your business without a budget is an automatic red flag for cashflow and profitability problems.
Successful business owners set clear targets and budgets each year, monitor them closely and adjust them regularly.
Here are 3 compelling reasons your business needs a budget:
- If you don’t know where you’re going, how do you know you’re not already there? If you’re not satisfied with how your business is performing, unless you set clear goals for where you want to take it, it’s probably as good as it’s going to get. And, yes, it is about the numbers.
- What’s more important to treat, symptoms or causes? Sales don’t just happen. Costs don’t just drop because we want them to. They are the result of other underlying factors, called drivers. Your budgeting process quantifies the symptoms (i.e. decreased sales, increased costs) and identifies the causes, your business drivers.
- Budgeting is not about accounting. It’s about being Your business drivers create your business results. Your budget won’t just give you a monthly sales target it will help quantify the drivers that produce that $ result. E.g. if September’s sales target is $50,000 that $ amount is not your daily focus. Knowing your underlying drivers, your daily focus becomes:
- 20 calls per day
- At 50% conversion rate; with
- Customer average spend of $250
Now you have a clear daily focus and are 100% accountable.
If you want to take more control of your business and its performance or find out how to become more accountable, please contact Dianne Brown of SRJ Walker Wayland on 07 3490 9988.