Yes! Yes, you do!
I know, I know. No one likes to create them. No one likes to stick to them.
But they are absolutely necessary if you want to be successful with your at-home business.
First, let’s get the name issue out of the way. If you don’t like the word budget, then call it something else: Business Blueprint, Financial Roadmap, Annual Financial Goals. Do any of those sound better to you? Good. Pick one.
Now let’s move on to why it’s so important.
What is the purpose of a budget? Many people think of it as something that limits our spending. That is true and when we are talking about a personal budget that can certain seem like a bad thing (I can only spend how much on eating out?!). But when we are talking about a business budget, limiting your expenses is a good thing.
However, that’s only half of the equation.
The other half is your revenue or sales. How much money to you want (or need) to bring into your business?
Without a plan for your revenue AND your expenses, how do you know you are going to achieve the amount of income you desire? I’m sure you have an income number in mind, but without knowing how you are going to get to that number could cost you time and money along the way. You will more than likely make some mistakes as you grow your business (we all do!) and they could be huge, costly mistakes. However, with a budget as a guide, you will be able to see in short order when and where you are veering off course. You will then be able to make the necessary adjustments quickly.
Think of it this way, you live in Boston and want to drive to New York City which should take you about 4 hours. You know the general direction that you need to head, but without a roadmap you could easily end up way off course and take you several more hours to get to NYC. This would cost you both time and money. Now even with a roadmap, you could make a wrong turn, but chances are you would quickly realize your mistake and make the needed adjustments to get you back on track.
This is what a budget does for your business…it helps you stay on track and when the inevitable wrong turn occurs, it helps you get back on track to achieving your financial goals.
Do you have any questions about budgets? Please comment and I will address them in future posts.
Check out my Bookkeeping Checklist to find out how often you should be referring to your budget.