Every small business needs a budget. But I know that it always creeps to the bottom of your to-do list, or maybe it doesn’t even make it there in the first place!

Creating a budget is a simple yet often overlooked task in our business, but if you’re going to step into your role of CEO and create a business that creates the life that you want, then budgeting is one of the very first financial steps you should be taking.

A budget helps you bring greater success to your business by analysing how you’re going spend money in your business, and what the likely return will be.

So, why should we be creating a budget on a regular basis and making sure that it doesn’t end in the bottom of the filing drawer?

Understand the road ahead

If we know the challenges that lay ahead, then we have the financial awareness of what we can spend money on, and what maybe what needs to wait until later.

Knowing that you have the funds available to you in your budget also means that you can make quick and informed decisions on investment opportunities when you need to.

Identifying those periods where your expenses may be higher (for me, all my annual subscriptions seem to renew in June for some reason!) means you’ll be prepared and know that you’ll need to accumulate funds to be able to cover them.

There’s nothing worse than being left short, or with a maxed-out credit card when an important payment is due.

Understand the assumptions

This is the if, then test. So, if I invest in a networking membership worth $1,000 per year, can I reasonably expect to gain enough new clients to make the investment worthwhile?

If you’re spending $1,000 on a new system that automates your client onboarding, is it realistic to expect and extra $100,000 in sales?

By looking at your return on average spend (expense/income generated x 100), you’re going to get an incredibly good idea of what you’ll earn for every extra dollar that you spend.

Use as a baseline review tool

A big part of budgeting is not just looking forward, but also looking back to review what’s happened and whether your assumptions were correct.

Reviewing allows us to gather important intel that we can apply to our future budgets.

It also gives us valuable information on where to place our focus within other areas of our business. For example, do you need to spend more on marketing expenses to increase your revenue? Or do you need to think about increasing your expenses for another team member to help you generate your income goal?

This constant revisiting and reviewing your budget will empower you to grow your business with confidence, knowing that you’ve got your finances under control.

Budgeting is one of the easiest ways to stop that *inhale sharply* moment when an invoice arrives or panic when you have no credit left on the credit card.

If you’d like help building your budget, then my Simple Start package gives you all the tools, templates and training you need to begin on your journey to empowered financials. It also includes 1:1 time with me to go through your work and offer suggestions and tips on how to continue to use your numbers like a boss.