Uncomfortable, restricted, stressed, nervous, limiting, unreliable – these are just some of the words people used when asked how budgeting makes them feel. But budgeting is a vital part of running a successful business and, when done well, doesn’t need to elicit such negative emotions.
Your business budget helps you to check the viability of your business operations, set prices for products and services, plan for how to spend money and formulate contingency plans. If you think about the components that go into a budget rather than being overwhelmed by the concept, this will help to breakdown the budgeting process into digestible chunks. For example, if formulating a pricing strategy, think about your addressable market and then consider your expenses in terms of fixed and variable costs. This will help to determine a pricing strategy for your products or services which will cover the costs of running the business and maintaining a profit margin. Ultimately, a budget should be a useful tool to support your business plan and strategy – and not something to avoid.