Creating and managing a budget might be one of my most favorite business activities as an owner. The boxes and lines, control and excitement, strategy and repeated actions allows my mind to “zen out”. It must be an entrepreneurs “meditation”. But it doesn’t end after building it. Taking this same system and implementing it via the decisions I make, the strategies I implement, the people I hire and fire completes the perfection this system has become.
While doing it takes part art, part science, it is a fascinating system to me. If maintained consistently, reviewed habitually and re-forecasted carefully it will be a tool that frees you most. Because it always comes back to the numbers.
The last time I sat down to write one, I remember thinking how do I get even bigger. Chasing my business was dreams of the past, when I was smaller and more vulnerable. Now, I have to stay ahead and that is even harder. My budget tells me how to quantify my dreams, plans, strategies and actions.
For those that manage their organizations with their budget, as opposed to whims and feelings, I commend you. I applaud your diligence and loyalty too a system that will keep on giving, if you give to it.
Wait a minute. Maybe we need to back track. Do you know what a budget is? What it is supposed to do?
A budget is a forecasted financial strategy. Because it contains predictions of the future, it isn’t an exact science. The idea of creating perfection is not what we are attempting to do, as you will never arrive if that is your intent. A well rounded budget supports your vision for the current year. You will manipulate it month after month, as your business delivers goals and misses targets. Your ability to make faster decisions, implement changes quickly and move at the speed your business needs you to is what your budget will support you in doing.
Establishing focus and control over daily, weekly and monthly decision making can be tough. What we wish for at the beginning of the year can be quickly forgotten as the year goes by. Staying on point, will ensure your best efforts are being put towards achieving a desired goal.
Organizing your actions and intentions for what you are going and want to do in the business is the goal for building your budget. Finding a good budget tool that serves you in forecasting, reconciling and giving you standard financial rations is what will start feeding you the information needed to lead your company.
Managing By Your Budget
Managing your business via your budget, is similar to driving your car. Generally when you get in your car, you know your intended destination. This gives you information to then start using your dashboard to help you arrive at that destination the easiest, fastest way possible. Your gauges tell you how well you are doing, whether you need to speed up or slow down and how well the engine is doing to continue to move you.
The first thing you will need to assess is if you have your team conducting the work necessary to build out and track and audit your budget. Generally you will see a President(who needs the tool and information), the CFO that manages the bookkeeper in achieving it, reviewing it so it is in its truest form possible before being used by the President.
Whew. That is a lot of positions and work. You might start recognizing that you fill all the roles. Depending on the level of support you get, will determine efforts and time that will need to be devoted to this. When you think about it, no matter what, this should be happening…yet lets be honest, we know it doesn’t always work well. Numbers are reported late, budgets neglected, backlog in knowing what you are truly making and paying.
Setting the “excuses” aside, making a priority to maintain the numbers and sit down with your audited budget on a monthly basis is all we are asking. One hour a month to review, learn and discuss what is financially occurring in your business.
So, does it make sense how it becomes one of those non-negotiables? One of those “have to, nothing gets in the way”, activities in your business?
If you need a tool, help reviewing it or supported in the forecasts you need to make, let us know. We are always here to talk.by