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Why don't budgets work for most people and tips to prevent it #1

Why Budgets Fail and How to Fix Them

Here we explain how to create a quick effective Budget, BUT...…why is it so hard to make them work for your business?

"A budget tells us what we can't afford, but it doesn't keep us from buying it."

- William Feather-

Budgets are the first line of defense against cash flow problems

We all need to plan our funds for our business but the hardest thing to do is to resist spending funds that we see in our bank account. In our experience, there is a basic psychological effect that occurs to many business owners when there is extra funds "sitting" in their bank account; they are prone to acting on excitement to spend rather than to plan and preserve.

Quick and Easy Financial Forecasting Tips

Mastering easy forecasts is like having a financial superpower - drive your business towards growth and stability...

"With a quick step-by-step approach, you can turn your figures into financial power"

First of all..........What is Budgeting?

"A budget is telling your money where to go instead of wondering where it went." - Dave Ramsey

🤔Imagine budgeting as sketching out your financial dreams for the coming year. It's your plan for allocating resources and benchmarking performance.

You use past and present data to create your business' financial roadmap.

Crafting Your Financial Roadmap in easy steps:

All planning requires good information and that comes from great bookkeeping. If you need to help to get your bookkeeping in order, you can talk with us in a free consultation by clicking HERE: Profit Cloud FREE Consultation

  1. Set Your Financial Goals: What money do you want from your business? This becomes your budget net profit. After all, your business must be designed to serve you

  2. Use your accounting software to work out your Gross Profit %: This is really important because it is used to calculate how much money you have left after the cost of delivering your product/service is deducted

  3. Paint Your Expense and Loan repayment Picture: This is all your expenses that are not your costs of delivering your product/services. It is important to include loan repayments here

  4. Schedule Budget Reviews in your Calendar: None of this works if you are not doing it regularly. Monthly review makes the process quicker and easier.

Make Your Budget Happen

"It's not only about how much money you make, it's how you spend it."

With your budget prepared, it's time to breathe life into it.

  1. Set concrete financial goals for revenues and chase them

  2. Set financial limits for your expenses and keep them.

"The art of budgeting and forecasting is not just about numbers; it's about painting a picture of your business's future."

The best way to turn your financial aspirations into tangible, measurable results is to involve someone else in this planning and regular discussion.

  1. Tell your team about the revenue goal and set weekly goals for sales and work completion

  2. Talk with a trusted person about your personal financial goals from your business and review weekly your progress towards this with them. It is a 15 minute review a week that creates motivation and direction for you

Simple Review Techniques you can do even without a budget:

  1. Review Customer Deposits: Tally your customer deposits weekly. Are you hitting your revenue goal?

  2. Review Your Expenses: Review your expenses from your bank. Are you happy to pay what you paid your suppliers? Did you get value? Get rid of the expenses that you do not need.

  3. Update Your Bookkeeping: Use an accounting software that is good because you need it. It saves so much time and compliance is becoming more complex and completely digital.

  4. Schedule in Calendar Weekly to ask yourself the following questions:

  5. Am I making enough money for myself?

  6. Am I paying my taxes?

  7. Am I paying my suppliers?

  8. Is my business growing in value?

Conclusion: Embrace Financial Planning just a little

Yes we have simplified a very complex topic in this article but we believe that even simple techniques improve your outcomes.

We are aware that budgeting can become very complex and sometimes it needs to be. When you need more help, we can do it for you

It is a key part of our strategic bookkeeping services to provide you with useful information to help you grow your business.

Feel free to book in an FREE Consultation HERE


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