‘A budget is telling your money where to go instead of wondering where it went’. Thank you Dave Ramsey for describing a budget so brilliantly!
At its core, creating a brilliant budget for your business or personal situation isn’t that difficult at all … you simply need to answer these two questions:
- What do I need to spend my money on? These are called fixed costs.
- What would I like to spend my money on? These are called variable costs.
Once we have established what we need to spend our money on and what we would like to spend our money on, then comes the tricky part … creating a budget template that will work for us and that we will actually use! We have created a lot of budgets for business and we have found that the following steps will help you to create a brilliant budget.
Step #1: Get out your last budget
If you have put a budget together before, then get it out and dust it off. Even if you haven’t looked at it since you created it a few years ago, it will potentially save you some time and it will definitely show you what template didn’t work for you in the past.
Step #2 Set aside time to work on your budget
You need to allocate enough time to do your budget right the first time. If your previous budget isn’t being used it could mean that a) you didn’t know how to use it or b) it was not accurate and it didn’t cover everything you needed it to cover.
Step #3 Gather the information you need
You need to gather all the financial facts about your business before you sit down to work on your budget. You will need to understand the amount and the frequency of your various incomes and expenses as well as when they fall due. We find that bank statements, business reports, business plans and your business vision is all needed to create a brilliant and reliable budget.
Step #4 Be brilliantly honest as well as bold
If you want to grow your business and last year you achieved 10% growth and this year you would like to aim for 50% in growth, then maybe it is time to be brilliantly honest with yourself. Is that really achievable? While you need to plan for greatness in your business, you need to also create a realistic plan.
Step #5 Share your budget with key team members
Get maximum ‘buy-in’ from your Team including your Support Team, such as your Achieve Business Dynamics Business Coach, by sharing your brilliant budget with them! No one can succeed in business on their own. You will need the support and assistance of others and that includes those that can help you to achieve your budget goals. As an added bonus for sharing, you will also have the opportunity to absorb third party feedback and you will be kept accountable to your budget.
Step #6 Review, update, repeat
Your budget is not something that you can write once and then pop in a draw and leave until next year. It needs to be dynamic, it needs to be used and it needs to be reviewed regularly. The insights that you will find will appear from the gap between your budget and reality. This gap is where the true brilliance of your budget lies and it holds the answers to accelerated business growth.
While these steps are fresh in your mind, get out your last budget and give it prime position on your desk. With these 6 steps you can now approach your new budget with even greater confidence and brilliance.