A business budget is a hard thing to get your hands around. It is a difficult beast to tame, and much like a beast, if you let it grow wild rather than taming it from infancy, your job is going to be even harder. Suppose it is too late, and your budget is as wild as the day is long already. Is all hope lost? No, it isn’t. You have a hard job ahead of you, but it can be done. Success is possible. These tips can help.
Recognize the Problem
The first step toward recovery is recognizing there is a problem. If you look at your financial statements and see that you have more expenses than income, have no clue what those expenses are, or worse yet have no clue how to read your income statement, there is a problem.
If you can’t get your hands around the money, can’t tell where it is going, or even where it is coming from exactly, it is time to tame that budget and get it under control.
Digging into the ins and outs of a budget is not for the faint of heart. Once you start you may realize you really can’t do it on your own. It can be difficult and time consuming to track expenses, make changes, and create a new budget within the framework of how your
business is already working.
There are a couple of options for this. You could have your bookkeeper do it, or hire a bookkeeper if you have been doing it yourself. However, you are likely going to need your bookkeeper to continue handling the day to day financial side of the business.
The other option is to hire a CPA for the job. You may already have a CPA for tax purposes, but ideally they will not be the one to dig into the budget. In fact, depending on the situation, it may actually be against best practices, or even illegal, for them to do so.
The best option is to hire an independent CPA to take a look at your financials, trace the money, and offer suggestions for changes. Have them work with your financial staff, or work with them yourself is there is no staff. Then, they can help you set up a budget that creates promise and future for your business.
Not having a budget, or having a budget you do not understand, is like not being able to see the road. You are driving blind. Not having financial goals is like driving down that road with no clear understanding of where you are going.
Goals can include reducing certain expenses by a set amount or percent, increasing sales over a certain period of time, or simply coming out of the year within your new budget. Whatever the goals may be, they must be realistic and measurable, and you must have plan to achieve them.
Once you have your new, tamed budget, goals in place, and a plan to reach them, you can move forward with your eyes wide open. This will help you to have a clear vision of business success, and allow you to better grow your business to its full potential.