Why did you start your business? neonbrand-JW6r_0CPYec-unsplash (1).jpg

 

There are, of course, all sorts of reasons that someone becomes an entrepreneur: passion, boredom, necessity, inspiration, liberation . . . you name it. But even so, it is also safe to say that there is one reason you did not start a business:

 

A love of budgeting.

 

Indeed, I would venture that creating a budget – or “the B word” as I like to call it – ranks near the bottom of those things that a small business owner has to do (if they do it at all.)

 

And the reason is self-evident. If you are like most small business owners, then you likely think along these lines:

 

  • Budgets constrict
  • Budgets are complicated
  • Budgets are boring

 

But what if I was to tell you making a budget is easy but moreover, that creating a budget is liberating?

 

It’s true.

 

A big problem, of course, is that B word. With so many negative connotations associated with it, no wonder you don’t want to create one. Think of it this way instead:

 

Would you ever get in a car, start it, then put on a blindfold and drive away?

 

Of course not. With a blindfold on, you would never know if you were headed in the right direction. You wouldn’t know if you needed to slow down or speed up. How would you know if you needed to pivot – err – turn in a new direction? And what if a red warning light started flashing? With a blindfold on, you would never know there was danger ahead.

 

A budget is simply the process of taking off the blindfold so you can navigate the entrepreneurial highway clearly.

 

So, instead of calling it a “budget,” try calling it a “plan.” What is your plan for your business? How much money do you have and need to execute on your plan? That is all a budget really is.

 

Would you like to spend more money on Facebook ads this quarter? Great, then do so. All you need do then is look at your plan, decide how much you want to spend and then decide how to pay for them. If that means less entertaining, so be it. You decide what your priorities are. It is your plan after all.

 

How to Make a Budget

 

Here is how you make a financial plan for your business, a.k.a., a budget:

 

Step 1: Go over your expenses for the past three months and categorize them. If you have a tool like QuickBooks, this should be easy, but even if you don’t, it should be fairly painless. How much did you spend on:

 

  • Rent: $
  • Labor: $
  • Taxes: $
  • Inventory: $
  • Marketing and advertising: $
  • Taxes and insurance: $
  • Capital expenditures: $

 

And so on. It’s your business, your plan, so make this list your own.

 

Step 2: Decide if this is the best use of your precious capital. Maybe you want to spend less on marketing next quarter and more for hiring contractors to help carry your load. Great! Start a similar list, add a category called “Independent contractors,” and next to it, add a realistic number. Then you just need to cut back in a few other areas to make the numbers crunch.

 

Voila, you just created a budget.

 

See, that’s wasn’t so tough, was it? Instead of your finances running you, you are running them. You figured out how to get some extra help, and even how to pay for it.

 

And there you have it. You just took the blindfold off and made a budget, oops, I mean a plan.

 

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 Steve+Strauss+Headshot+SBC.pngcolumn 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 also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web: www.theselfemployed.com or Twitter: @SteveStrauss

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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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