54% of Small Business Owners intend to implement a budget

Over half of 335 small business owners and managers intended to implement budgets in 2021 according to a survey by Clutch 

Running a business without a budget is a little bit like driving at night without the headlights on. You know where you want to go but you can't really see that far ahead of you or what obstacles may appear in your path.

Owner operator or business's with less than 19 employees are undoubtably the most common business type worldwide - these are also the most likely to be operating without a budget. The most common reasons for not implementing a budget being time restraints on the owner or the lack of know how on how to do so. 

Ironically those same time restraints are often due to dealing with crises that occur due to spending money the business does not have, not managing resources effectively and/or not planning for emergencies. All of which implementing budgets would help eliminate.

You are going to spend that time anyway, you may as well spend the time wisely. 

Better Money Management

Implementing even the simplest budgets will improve your ability to manage your time and money more effectively

Your business should be paying for it's own operations. If you, like many other owners are constantly injecting cash into the business to cover operating expenses that is a sure sign you are in need of some planning.  and regularly monitoring results against those budgets allows management to ensure you have enough available funds to fund operations consistently and can put aside funds for expansion.

Every business is subject to the peaks and troughs in trading and/or cash reserves. That is a normal part of running a business. Budgeting for enough working capital to cover dips in trading will ensure you are not dipping into your own pockets. 

Manage resources more effectively.

Planning and monitoring your business's growth is just as important as tracking costs. When a business goes through a growth spurt, costs will increase sharply as well - often these costs need to be paid out before you can bank sales receipts. Grow too quickly and you can quickly find yourself without any funds

The healthiest balance sheets are those in which expansion is funded by Sales Revenue and not from borrowings. Your business is just not likely to get to that place without putting some planning in place. A business budget helps owners determine if they have enough money to fund operations, expand, and generate income.

Achieving Business Capacity

A common drawback of running operations without planning and budgets is to underestimate just how much earnings your business is capable of.  You can't bring in earnings you don't know you can make.  Knowing your business capacity is crucial to ensuring your business operates at an optimal level. 

More Control over decision making

Tracking your performance allows you more control over your decision making. Demand for your product or service is subject to seasonal or other cyclic 

Budgeting needs to be flexible. Monitor your performance and can make changes along the way to ensure you meet your objectives.

Identify problems before they occur

Business's don't just fail without any warnings. There is always an indication of problem areas in the financials well before a business goes under. Regular reporting is a crucial tool in uncovering those well before they threaten the livelihood of the business. The more regular you report the quicker you can put in control measures to mitigate.

Whether that be the need to raise finance or cashflow difficulties

Increase Motivation

Having a flexible budget allows everyone to be working toward the same common goals. Setting realistic targets for yourself and/or staff can increase motivation and morale.

However there is nothing more de-motivating than setting unachievable targets - for both yourself and/or your staff. If you have set your business goals high - that's great - but make sure your budgets are realistic and achievable.  You may need to stagger in your increases in sales targets over an achievable amount of time.