What Are You Reaching For? Budgeting for the Upcoming YearPosted on September 8th, 2020
Whether you’re the owner of an established small business or starting a new venture, you may be struggling with the uncertainty of the times we live in. While it’s true that there are a few extra road bumps facing businesses right now, we can take comfort in the fact that some of the best advice in a moment like this is evergreen – make a budget and stick to it! In fact, this is the perfect time to take a step back from the day-to-day and take a close look at where you’ve been and where you’re heading.
Protecting the financial health of your business is vital to its success. You’ve made it to where you are today through hard work and dedication, so don’t leave your financial future up to chance. The process of creating or reviewing a budget can help small business owners assess their current situation, prepare for the future, and create goals that will help them succeed.
What Are You Reaching For?
I won’t spend much time on the typical reasons to make a budget – most business owners understand that budgeting is worth the time and effort it takes to create a clear financial picture. You need to know where you currently stand in order to determine what you’re reaching for!
This is the aspect of budgeting that inspires me most. It’s not just about the numbers, it’s about what they mean. For many business owners, the budgeting spreadsheet is actually about setting goals and building a strategy for growth. Not only does budgeting help determine what your goals are, it’s a valuable measuring tool. You can look back at each month’s projections to see whether you’re meeting your goals and make necessary shifts to stay on the right track.
Spending time with your budget means reflecting on what you’re reaching for. So, what are your goals?
As Devra Gartenstein notes for Chron, “Profitability is the most basic financial goal for any small business.” But reaching true profitability isn’t just ensuring that your revenue is greater than your expenses. “Profitability goals for a small business”, Gartenstein writes, “should be sufficient to sustain stakeholders such as owners or shareholders and to enable the business to save money for expansion or capital reserves.” This is the difference between surviving and thriving.
You might be surprised at how often the budgeting process reveals both large and small inefficiencies that could be holding your business back. Whether accidental duplication of costs, redundancies in services, or missed opportunities to save a few dollars here and there, these inefficiencies can make the difference between baseline profitability and your ability to invest in the future. As Jeremy Goldman urges in Inc., “Long-term success in business (is) about making small but significant changes that cut costs and drive revenue.”
The ultimate goal for most small business owners is the ability to invest profits back into their company, creating a foundation for further growth and success. The budgeting process not only helps make those investments possible, it points to the areas of your business that would most benefit from an upgrade. Some companies may benefit from investment in new technology or software, while others may need to invest by increasing spending in areas like marketing and communications, human resources, or strategic planning. Often, the most powerful investments are intangible.
The CFO Mindset
As a financial services professional with experience as a CPA as well as in financial leadership positions, I’ve become a tireless advocate for the value of financial guidance for small businesses. That’s why I believe so strongly in the value of the budgeting process for setting goals and ultimately achieving them. Not only that, I highly recommend undertaking this process with expert guidance on your side.
Most small businesses can’t afford a full-time Chief Financial Officer to handle the budgeting process and offer valuable advice. Luckily, you don’t need a full-time CFO to make informed budgeting, financial planning, or strategic investment decisions. Through e2E, LLC you can gain access to CFO services tailored to your business’s unique needs.
Flying by the seat of your pants isn’t enough in times like these – you need access to experienced advisors so you can do what you do best and leave the rest to us. Contact our team today to learn more!