Small business budgeting is very straightforward, at the core: put your money where it’ll net you the most money back, in the quickest amount of time, in the most responsible way. So why can business budgets get so emotionally loaded? So confusing? So unproductive? So lacking in results? The people responsible for a company’s finances are often held back because they fail to implement these three simple habits:
Reviewing the Data Regularly
Checking the numbers regularly (say, weekly, monthly, or whatever is appropriate to your business) keeps you grounded in your quest to implement what works and toss what doesn’t. When you don’t review the numbers regularly, suddenly running the business becomes an intellectual exercise instead of a practical implementation of your principles. Your business budget planning loses touch with reality. Worse, when your decision-making becomes divorced from reality, you’re no longer running a business – you’re just spinning your wheels. So stay in communication. Watch the numbers, talk about everything you need to talk about (with whomever you need to talk to), and get clear on what needs to happen next.
Accepting the Facts
The numbers in your accounts represent valuable information about what’s working and not working in your business. When you or the people managing your money are emotionally attached to certain ways of making money, you lose the ability to adapt to changing circumstances in the most effective way possible. So, when you begin to lose money in one area, it’s tempting to pour more money in to try and offset the loss, even if that’s not the wisest move to make. This behavior pattern also works in reverse – if one profit center is making money, it’s very tempting to let it be, when in fact you might see even better results if you poured more money into that cash machine. Accepting the facts creates the space to make reliable, effective decisions.
Acting on the Numbers
Sometimes, business owners use the numbers to justify not taking action that would move them forward. This is you if you’ve ever heard yourself say some variation of, “I can’t invest in that, I just spent money on a marketing campaign! I can only do one thing at a time!” If you’re sitting on money, make sure it’s being put to good use. That could be keeping the money in an account for liquidity purposes, and it could also mean investing in leadership team development. If it helps, build flexibility into your business budgeting by allocating a “flex fund” to experiment in finding new ways to expand your enterprise.
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