What’s the one biggest mistake small businesses make?
NOT. BUDGETING.
Let me say this now: you need a budget.
I don’t know if that really sank in so I’m going to say that again.
You. Need. A. Budget.
“A budget is telling your money where to go, instead of wondering where it went.”
Dave Ramsey
Every successful business has one. I guarantee you 500 out of 500 Fortune 500 companies have a budget, and yet 95% of small businesses don’t. But that 5%, that 5% that does knows a secret that the others don’t, a secret that separates the good from the GREAT. And that is: budgeting. Budgeting is planning for success, and it ISN’T hard.
Now if you’re like me, the “B” word gets you less than excited. It feels like a tight turtleneck pressing on your throat. It feels like a scratchy hot sweater, on a day that’s warmer than expected. It feels like a thick coat you can’t take off… can you tell I really don’t like feeling hot, or wearing winter clothes?! All of that is to say, it feels constraining and constrictive. Like the “D” word (diet) it automatically creates a sense of deprivation.
But since you still need one, let’s reframe this idea.
First, let’s ditch the “B” word, and replace it with something better. Let’s call it a map to financial success or financial roadmap. Now this financial roadmap is not something to dread or fear. It’s not something that’s going to obligate you to do anything you don’t want to do, and it’s not going to feel restrictive. It’s simply a map. An image, if you will, of what you imagine the next 12 months of your business will look like. It’s a map that can give you an idea of where you want to go and can help you set goals: like shave off a few dollars in expenses here, increase revenue a bit there.
A good map leads you in the right direction and lets you know where you’re headed. It also helps you circumvent unexpected roadblocks. When unanticipated expenses occur, it’s easy to glance at your roadmap and find workarounds. Every business is cyclical and has months that are better than others. A financial roadmap can keep you on track. It can help you remember to save during the good times and are prepared for the the lean times.
“If you fail to plan, you plan to fail.”
Benjamin Franklin
But this sounds hard right?
That’s what I thought anyways. I’d never made one for my family or past businesses, it sounded complicated, or at the very least boring.
Well, good news! It’s not so bad. I absolutely have one now for my business and even developed one for my family!
Next time in part 2: How to DIY your very own financial roadmap