Small Business Budget Not Working? Here’s Why.

Natalia Autenrieth In her professional lives across the United States, Natalia Autenrieth, CPA has audited Fortune 500 clients as part of a Big 4 team, built an accounting department as a controller of a large hospital, and served as a CPA consultant to municipalities. Today, Natalia coaches in the financial industry and writes about business finance, financial technology, and personal money management. Her ghost-written articles have appeared in thought leadership and expert blogs, as well as Kiplinger and Accounting Today. Read more about Natalia and her practice at www.AutenriethAdvantage.com.

Small Business Budget Not Working? Here’s Why.

One big reason why small business budget fail — and three ways to fix it.

There is a big problem with small business budgets.

Business owners and managers approach budgets as a crystal ball. They feel the pressure to predict the future and get it 100% right every budgeting season. Which, of course, never works that way. It’s no wonder that business owners’ ability to procrastinate on creating budgets is second only to tax filings!

Is there a way out of the vicious cycle of throwing some numbers together, second-guessing them, missing the mark, and begrudgingly starting over?

Yes, there is. But it requires the business owner to reframe what a budget is.

Budget as a decision-making tool

A budget is a model of your business. There, using neat columns and rows of numbers, you can build what-if scenarios to help you make decisions. What would happen if demand surged? What might a second location look like? What would your business look like with a different supplier, a new line of products, or a project manager to take some of the day-to-day coordination off your shoulders?

Sometimes, the way to get a budget done is by allowing yourself to make several budgets in parallel. This might relieve the pressure of getting your one and only golden standard budget “right” — and encourage you to acknowledge the fact that you don’t “know” how the future will turn out.

Budget as a way to embody your business goals

Is budgeting a way of dreaming in numbers? That may be a whimsical way to describe it, but at the end of the day budgeting can become your tool to bridge business goals with concrete numbers and timelines. It can help you move from your vision for the business (i.e. what are you building?) to the ever-concrete “how?”

What level of sales would it take for your business to become the #1 choice for your ideal clients? What revenue do you need to hit before you can afford to add staff, buy that piece of equipment, or exhibit at a big show?

Budget as an opportunity for the team to come together

Budgeting was never meant to be a solitary experience. Bring the team together, so that everyone can better understand the interdependencies within the business. This is a good chance to listen to your front-line customer facing team, connect to shared motivation, and get their buy-in for the goals that will move your business forward.

Small Business Budgeting 201: There is a better way!

If you want to overcome procrastination and to get the most out of this budgeting season, begin by reframing the way you see your budget. Lift the expectation of getting it “right”, and focus instead on the modeling, strategic, and inspirational power of the numbers.

A best-in class budget allows a business owner to let go of perfection and creates room for real-life messes — which will include both future opportunities and emergencies. Be sure to use integrations within your accounting and reporting software to minimize the burden of data entry and update.

Finally, focus on trends and the long term. Just like wine, budgets get better with age and perspective!