The Importance of Budgeting for the Small Business Owner

Budgeting is an integral part of society. In today’s fast paced world; every day we try to budget our time, our kids’ time, our meals, and our money. Unfortunately for many, most of this process is done mentally and never put on paper. Remember, just as families budget time and money, your business must also develop a financial plan. This type of budget is simply a formal written summary of your goals and intentions in terms of dollars.

Budgeting requires you to look ahead and formalize future goals. By establishing a budget, you can set goals for achieving a certain level of income and monitor your expenses. Many home based and small-business owners have remarked that their increase in profit margins did not occur until they had a written revenue goal and a method for monitoring expenses.

Other business owners need to know their sales levels in terms of dollars and how hard they need to work to make the budget work. The closer you come to the goals you have set for yourself, the closer you will come to achieving the budget amount you need.

Contact your Rea advisor with your budget related questions.

This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 12/19/07.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.