Successful small business leaders view their annual budgeting process as one of their most important managerial tasks. Ever stop to think why budgeting is important for business in the first place? Reasons abound, but here are a few.
1. CONTROLS SPENDING
We've seen that employees with spending power more carefully consider their purchases if they’re aware of spending limits.
2. INSPIRES EMPLOYEES
Involve appropriate employees in the budgeting process to build consensus. Then share it with your team. You'll find that communicating quantifiable goals and making it clear that the budget makes it possible to hit those goals will motivate your team to do their part in making the budget a reality.
3. Informs Stakeholders
No one likes surprises - especially your bank. A shared budget goes a long way toward building trust. That relationship may come in handy if you ever need to call in a favor down the line.
Budgeting doesn’t have to be a huge project. Start with last year’s income statement and project each revenue and expense account for the year to come.
For more behind the reasons why budgeting is important in business, read our article here.
Need help building a budget?
Driven Insights serves as an outsourced finance department for service firms, performing all internal accounting functions from bookkeeping to budgeting. Contact us to learn how we can inform your key decisions: firstname.lastname@example.org or 888-631-1124.