I have a question for you: Would you ever get in your car, put a blindfold on, and drive away?

 

Well, of course not.

 

With a blindfold on, you would never know if you were headed in the right direction. You would be unable to see if a red warning light popped up on the dash. You wouldn’t even know if you had enough gas to get where you are headed; you would be completely lostSteve-Strauss--in-article-Medium.png.

 

The reason I bring this up is because this is exactly what happens to small business owners who run their businesses without a budget. Doing so is akin to driving with blinders on. Are you headed in the right direction? Who knows? Do you have enough cash flow to get you there? Maybe. Is there a warning sign of which you should be aware? Hope not. If you don’t have a budget, you just won’t really know – until you crash.

 

Oh, I get it. You don’t want to create a budget. Join the club. People start their own business for all sorts of reasons – epiphanies, freedom, passion, boredom, bosses – you name it. But I think it’s fairly safe to say that one reason is not because they love budgeting (unless of course you are an accountant).

 

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The fact is, there are two parts to any small business: what you love to do (the designer is great at web design, the jeweler makes stunning jewelry) and then everything else (the legalities, budgeting, marketing, and so on.)

 

Unfortunately, the “everything else” is crucial. The jeweler cannot just make rings. Those other parts must be mastered because they are what allow him to do that thing that he loves to do. Without marketing, he won’t have any customers. Without incorporating, he opens himself up to personal liability. And without budgeting, he can run out of money.

 

For many small business owners, the financial part of the business is not their strong suit, yet it’s almost more important than the more glamorous parts of running a business. Getting a loan, forecasting cash flow, having enough money set aside for quarterly taxes are the mundane tasks that are critical to the success of a small business.

 

This begs the question, is there some way to make these less glamorous parts of running a business easier? You bet.

 

Part of the problem is nomenclature; for many people, the word “budget” has negative connotations. A budget is a strict set of restrictive rules and guidelines that dictate certain actions and forbid others. It is a constricting, unforgiving formula.

 

No wonder people don’t like budgets.

 

And that is why I would like to suggest that instead of the word “budget,” you try using the word “plan” instead, because really, that is all that a budget is. It is your plan for how you can best use your money. Instead of thinking of a budget as a restrictive covenant, the better choice is to think of it as a permissive plan.

 

Would you like to spend more money on pay-per-click ads this year? Great, then do so. Look at your plan, decide how much you want to spend on pay-per-click, and then decide how to pay for it. If that means less for independent contractors this year, then so be it. You decide what your priorities are.

 

So go ahead, take the blindfold off. It’s OK. It is your plan after all.

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.

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Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

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