The Dog Ate It (and Six Other Excuses For Not Having A Budget)

If you own your own business, no doubt the end of the year brings you not just the holidays, but a lot of work to complete. You're probably thinking about wrapping up the books, selling any investments, organizing documentation for your taxes, setting your employees' benefits up, and creating your budgets for next year.

And when that list gets long or one item seems overwhelming, human nature kicks in and it's not often pretty. Nowhere have I see business owners procrastinate more or make more excuses than when I bring up the topic of budgets. So determined are they to "get out of" putting together a budget that they've offered up everything short of a permission slip from their mom to be relieved of the obligation.

Here are some common excuses for not organizing a budget, and why you should make one anyway.

Excuse 1: Budgets aren't flexible enough, so that it's impossible to stay with initial limits for the entire year. In fact, your budget doesn't have to be cut and dried. You didn't swear on your grandmother's best brownies that you'd stick with it no matter what. It's yours and if needed, you can be flexible with it. However, you should not just make a budget and then ignore it. It's estimated that up to 80% of companies who create budgets don't change even one detail during the fiscal year. In fact, that's not realistic. Not only is it possible for you to change your budget as circumstances require, but it's necessary. If appropriate, perhaps budgeting every quarter instead of yearly would be a better option for you.

Excuse 2: I won't be able to react as flexibly to an unforeseen crisis if I have a budget in place. The reality is that companies that create budgets tend to be more flexible and more proactive than companies without budgets. When you're actively tracking your progress toward a specific goal you can tell much earlier on if you've hit a snag. You can react while the situation is smaller and more manageable, and sometimes you can even see a problem before it occurs.

Excuse 3: It's too complicated to go through setting up a budget. In fact, this is a reality for many companies, but it doesn't have to be true. Even though many companies spend a lot of time sweating over their budgets and may even devote as much as 20% of their management's time to budget creation, this just doesn't have to be true. It's true that a certain level of detail is necessary in order for budgets to be effective. However, budgets can be pretty simple and still function just fine. Whatever time you invest in planning your budget, it's not wasted. You'll save time by being prepared for what may come up down the road because you've got a budget; when the time comes for you to make a decision on the spur of the moment, you'll know what to do, because you took the time to prepare.

Excuse 4: My industry changes too quickly for me to adhere to a budget. In fact, every company experiences this, because conditions change moment to moment in every industry, not just yours. Therefore, that's not a legitimate reason to avoid this necessary plan for the future. Your budget does not ask you to predict things you can't know, such as whether fuel prices will go up, whether staff turnover will be high, whether laws will be passed that will impact your business, and so on. Rather, a budget forces you to look at the overall picture and make a commitment to goals you want to accomplish, along with the actions you plan to take to do just that. These things are under your control, regardless of changes in your industry. You need to be able to look at your business and know what you want to accomplish in the next 12 months. If you can't do that, you need to figure out why.

Excuse 5: Budgets are meaningless. Everyone just fudges the numbers to paint a pretty picture of how things ought to look. Creating a budget that is based on too-lofty goals, hoping it will provide the inspiration to achieve them, is a sure-fire way to set yourself up for failure and frustration. One internet post compared budgets to pornography: "a fantasy about how the author would like the world to look, having no relation to the realities of the world, designed to titillate, stimulate and motivate the reader, but ultimately resulting in a sense of alienation and despair." Long-term, that's of no use. When it comes to budgets, you can and should keep it real.

Excuse 6: I have a budget, it's just in my head not on paper. Keeping mental note of your company's projects, numbers and expenses is overambitious. You may be able to do it for a while, but eventually your business reaches a size that makes it impossible for you to keep in touch with all of the details. If you have managers and employees working for you, it also prevents them from taking on some of the ownership and accountability for results with you. Even if you don't feel like you're big enough for a budget right now you will be one day. It's never too early to start a good habit.

Remember that in reality, a budget is just a plan. It makes you step out of your everyday business view and forces you to look at the big picture strategically, so that you have to take note of where you are now and plan for where you want to go. Without a formal plan to help inspire you to action, planning a budget will likely be pushed to the back burner as you spend all of your time managing daily fires to be put out.

So what is it? Your dog ate it? You need to shampoo your hair and won't have time? You've got relatives in from Iowa? Or are you ready to drop the excuses and start crunching numbers?

Article Source: http://www.search4allinfo.com

Author: Margot Brandlin is a Minneapolis Bookkeeper who writes for OWL Bookkeeping and CFO Services. Owl has a Bookkeeper in Minneapolis ready to take on your business finances.

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