CONQUER BUSINESS OBSTACLES WITH BUDGETING

On Saturday, I accidentally went rock climbing. I truly had no intention of clambering over rock after rock for 2,000 nearly vertical feet when I started out. I thought I was going on a hike to a panoramic vista. Well, the view was there, and it was breathtaking in more ways than one. Climbing the 2,000 feet back down was even worse. I hyperventilated. I cried. I fell several times. I plopped down on top of a rock at one point and announced to my husband, histrionically I admit, that he could just leave me there. I was done.
Obviously, I pulled myself together and made it down the mountain, thanks in large part to the infinite patience of my husband. My life was never really at stake, and my fears were largely unwarranted.
Astonishingly, many small business owners approach their budgeting decisions just like I approached that mountain. With so much more at stake, they charge up the hill, allocating resources to things that aren’t going to take them to the top and burn out long before they get anywhere. Without a budget as a map, they wander all over the mountain, with most never finding their ultimate destination.
Now is the optimal time of year to start seriously working on a 2009 budget for several reasons. First, it forces everyone to take a hard look at where the business actually is for 2008 to date, enabling corrections and adjustments between now and year end to achieve greater success this year. Second, it provides ample time to evaluate alternatives where they exist and truly determine the most efficient way to approach spending decisions for the coming year. Lastly, working on a budget now enables it to be completed before the holidays, more than a month before productivity suffers for most small businesses in general.
To help you get started, here are some tips for preparing and implementing a meaningful budget.
Work from the information you currently have. You can print year-to-date financials that can be easily annualized. To annualize a number, take an amount and divide it by the number of months in your year-to-date statement (say 9 if run through September 30). Then, multiply that by 12. The result provides a general idea of what your annual amount may be for that particular category. The annualized numbers provide an ideal starting point for a 2009 budget. Factor in any large planned expenses in the months you already know they will occur. It is easy to adjust an annualized number for firm amounts or general ranges that you know will be spent because those decisions have already been made and approved.
Be realistic. It is best to err on the side of lower income figures and higher expense numbers at first and then adjust expenses downward to balance a budget. Without a well articulated strategic growth plan, making revenue higher to enable more spending will result budgetary overruns almost every time.
Involve your team in the process. The more people you have in your organization, the more opportunities you have for budgetary straying. By making your key team members accountable for some portion of the budget, you give them buy-in and help them understand the nuts and bolts that make your company successful. People are usually much more excited about things when they feel a sense of ownership.
Be willing to compromise. Balancing a budget usually means everyone walks away from the table without something they wanted. In many small businesses, the owner gets too much at the expense of the business’ growth and vitality. Empowering a team and compromise help check that dangerous precedent.
Use these tools to plan now to successfully reach your monetary goals for 2009. A simple budget can make the mountain a cake walk. You may encounter some scary spots, but you’ll be prepared for them.
Call POSITUS. We’re here to help take you where you want to be.
Watch the video below to see one of the numerous rocks I climbed (and, yes, I know, it was more daunting to me than necessary.)