{"id":89,"date":"2016-04-10T10:24:02","date_gmt":"2016-04-10T10:24:02","guid":{"rendered":"https:\/\/www.oneaccounting.co.uk\/news\/why-budgeting-good-business\/"},"modified":"2023-01-11T11:06:06","modified_gmt":"2023-01-11T11:06:06","slug":"why-budgeting-good-business","status":"publish","type":"post","link":"https:\/\/www.oneaccounting.co.uk\/why-budgeting-good-business\/","title":{"rendered":"Why budgeting is good for business"},"content":{"rendered":"<p>When is the last time you made a major purchase? It may have been a house or car, caravan or boat. Whatever it was, unless you were in the fortunate position of having a large sum of disposable cash you probably thought about how you were going to afford to pay for it.<\/p>\n<p class=\"image-left\"><img decoding=\"async\" src=\"https:\/\/oneaccounting.files.wordpress.com\/2016\/10\/plan1.png?w=300&amp;h=260\" alt=\"plan\"><\/p>\n<p>When is the last time you made a major purchase? It may have been a house or car, caravan or boat. Whatever it was, unless you were in the fortunate position of having a large sum of disposable cash you probably thought about how you were going to afford to pay for it. Perhaps you used some savings, released some equity from your property, or took out a loan. Whatever method you used, you probably thought about what impact it was going to have on your future financial plans.<\/p>\n<p>Whether you explicitly thought about it as budgeting, in reality that was what you were doing. You were making a decision about where to allocate your finite financial resources, be they income, borrowings or savings. How you made that decision may have been based on all sorts of factors \u2013 the need for a larger property for a growing family, the status symbol of a new car, the pleasure of weekend breaks in your new caravan, or the love of life on the open seas!<\/p>\n<p>If you are a business owner, do you give the same level of forethought and financial planning to your business? If not, why not? Many business owners I speak to don\u2019t see the relevance of a budget for their businesses. They give a variety of reasons as to why they don\u2019t budget.<\/p>\n<p>\u201cMy business is too small.\u201d<\/p>\n<p>\u201cIt\u2019s too hard to predict sales.\u201d<\/p>\n<p>\u201cI have cash in the bank so I don\u2019t need one.\u201d<\/p>\n<p>\u201cMy sales and costs will be about the same as last year.\u201d<\/p>\n<p>\u201cI don\u2019t see the benefit.\u201d<\/p>\n<p>\u201cI\u2019m not a numbers person.\u201d<\/p>\n<p>However, if you don\u2019t budget you are failing to use an opportunity to make considered decisions about how you are going to use scare resources. Ultimately, your budget is your business plan stated in financial terms.<\/p>\n<p>Perhaps the reason you don\u2019t have a budget is that you don\u2019t have a plan\u2026\u2026..<\/p>\n<p>And, if you don\u2019t have a plan, then how do you know you are taking your business in the right direction? It\u2019s like driving to a new place without a map. You might not get there at all, and even if you do, it may take a lot longer than necessary. But if you had a map, you would be able to check that you were on the right path when you went past landmarks on the way. If you found yourself off course, then you could correct your direction, without wasting too much time.<\/p>\n<p>So, what should you do?<br \/>\n<a href=\"https:\/\/www.oneaccounting.co.uk\/wp-content\/uploads\/2016\/04\/SMART.png\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone wp-image-5447 size-full\" src=\"https:\/\/www.oneaccounting.co.uk\/wp-content\/uploads\/2016\/04\/SMART.png\" alt=\"SMART\" width=\"596\" height=\"345\" srcset=\"https:\/\/www.oneaccounting.co.uk\/wp-content\/uploads\/2016\/04\/SMART.png 596w, https:\/\/www.oneaccounting.co.uk\/wp-content\/uploads\/2016\/04\/SMART-300x174.png 300w\" sizes=\"(max-width: 596px) 100vw, 596px\" \/><\/a><\/p>\n<p>The first thing is to write out some targets for your business. These don\u2019t need to be financial but often there will be at least one that is related to money. I\u2019m sure you have heard the acronym SMART in relation to goals. To recap, make your goals, <strong>S<\/strong>pecific, <strong>M<\/strong>easurable, <strong>A<\/strong>chievable, <strong>R<\/strong>easlistic and<strong>T<\/strong>ime based. A goal of an increase in sales would <strong>not<\/strong> be a SMART goal, but an increase in sales by 10% within the next 12 months would be.<\/p>\n<p>Just going through the process of writing out your targets will make you think about your business and what you want to achieve from it. Think about why you went into business in the first place and if it is delivering you the lifestyle and rewards that you thought it would. If not, then perhaps you need to think about doing things differently.<\/p>\n<p>Then you can start to create your budget. Your budget is nothing more than a set of landmark financial targets to help keep you on course towards your goals. If you are the only person in the business, then the targets are just for you. If you work with a team, then sharing the budget can be a great way to get the buy in of your team. They are also a valuable source of feedback \u2013 are you being too cautious; are your targets unrealistic; can you meet targets with current resources or will you need extra ones?<\/p>\n<p>What should you be budgeting?<\/p>\n<p>Ideally, you should prepare a profit and loss budget, <strong>balance<\/strong> sheet budget and cash flow budget. We\u2019ll look at each of these in turn in our following blogposts throughout the month. Feel free to subscribe to our <a href=\"http:\/\/www.businessbitesize.com\/external\/\">Business Bitesize resources<\/a> for more information on business planning and development.<\/p>\n<p>Alternatively for more information don\u2019t hesitate to contact us on 0131 220 0152<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When is the last time you made a major purchase? It may have been a house or car, caravan or boat. Whatever it was, unless you were in the fortunate position of having a large sum of disposable cash you probably thought about how you were going to afford to pay for it.<\/p>\n","protected":false},"author":7,"featured_media":1586,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1,125],"tags":[22,23],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why budgeting is good for business | One Accounting<\/title>\n<meta name=\"description\" content=\"Why budgeting is good for business. Read our blog and know more about One Accounting, the cloud accounting and tax specialists. 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