“I was always running out of money, constantly struggling and missing my orders was the order of the day. Having my lights turned off, sometimes in the middle of a client presentation was not surprising anymore; all this because I had either forgotten to pay the bills or I had no money to pay, the devil is a liar”. Rosanne told us.
In small businesses, these kinds of confessions abound, and most of the time, they are blamed on external forces or things beyond our control. Have you ever stopped to wonder how a big organisation, with thousands of branches across the world, hundreds of suppliers and millions of customers can control their financial calendars, knowing exactly whom, why and when to pay?
The answer is; they meticulously prepare and monitor budgets, which helps them figure out these details. Since budgets have served big organisations well, we have misconstrued them to be a tool for big organisations. Yet, by the very nature of small businesses, the scarcity of funds, the reliance on the founder, and the advantages of a budget means that these small organisations need them most. Yet we find that most micro businesses don’t maintain budgets and struggle through financial management like dream walkers.
If you have experienced any of the symptoms below, either in your personal or business life, then you are suffering from a disease called lack of a budget and you should immediately take the steps provided below to return you’re to good health.
Symptoms of lack of a budget
- Run out of money unexpectedly
- Unable to pay for emergencies such as medical
- Unsure whether you can afford good business opportunities
- Have too much money lying around
- Losing suppliers due to your inability to pay them
- Unsure whether things are going well in your business, you have no idea where you stand
- Receiving reminders and chasers for payment from tax authorities, suppliers etc.
- Unable to identify business decisions such as when to increase your prices or hire more staff.
- Not knowing when to talk to your bankers about loans, investments or deposits.
To remedy these symptoms, you need to start preparing budgets, it is as simple as ABC. In upcoming articles, we will be teaching you in length.
- The phases or stages that you should go through while working on the budget for your business.
- How a budget influences important business decisions.
- Debunk the myths around budgeting in the article and guide you towards changing the mindset on why we must budget.
Simply put, a budget is a plan on how to earn and spend money. Maintaining a budget, updating and monitoring it often will help you avoid all of the above financial pitfalls that can harm your business.
Stick around and reading all articles in the series -as well as any other on budgets- to enable you to master the budgeting process. Remember, failing to plan, is planning to fail.