5 Reasons Your Business Needs a Budget
Provides a Numeric Representation of your Business Vision A budget is simply a numeric representation of your business vision and strategy. A budget not only incudes the costs of running your business, but also includes any events, new projects, etc. planned for the year. During the creation of your budget, you will allocate any costs associated with all events, projects, and any new initiatives for the year.
Provides a Road-Map for Your Managers By having a budget, it will eliminate the need for managers to request permission to spend for items needed for the business. It also minimizes your stress as the owner when spending, since you have already planned for the purchase and understand how the purchase impacts your bottom line.
Helps Highlight Unnecessary Spending Habits As you and your managers review your actual spending, you will begin to identify any unnecessary spending habits. Once identified, you can determine if those costs are truly no longer needed or may need to be added to the budget. Please ensure that your budget includes a miscellaneous line item to ensure that you have a method of tracking unexpected expenses.
Builds Discipline and Organization You and your managers will begin to become more discipline in your spending as you utilize the budget as the tool to determine what spending is approved. It also ensures that your business is more organized in your finances and provides a level of accountability for spending.
Helps you Prioritize Your Spending Once you and your team are in the habit of using a budget and comparting budget to actual spending, you will begin to see areas in which you may need to allocate additional spending, areas in which you can cut spending, new categories that need to be added to the annual budget, etc. Thus providing valuable insight on how to prioritize your spending for the next year.
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For more information on budgets see these additional resources: