The proverbial cocktail napkin and all its wonderful uses – dabbing up your spilled drink, playing tic-tac-toe with a friend, sharing contact information with a new friend, jotting down an idea, mapping out your budget . . .
Mapping out your budget on a cocktail napkin?! Say it isn’t so! But we have seen evidence of that and even less of that in our years at CSR. We have had clients who just don’t see the benefit of planning out their financial future – “why bother when things are so uncertain and unpredictable?” Other clients might be content to take an extremely high-level approach – “who has time to mess with all of those line items?”
We definitely have the drive, interest, and time to create budgets that work for our clients and see the multi-layered importance within each one. So why take the time to create a detailed budget in Excel or your favorite financial software? Here are three major reasons:
Business scrutiny – when you create a detailed budget, you are forced to dig into your profit & loss elements and really examine them. And you can collaborate well with your team during this process – make them part of the forecasting effort and put some skin in the game. What’s driving your revenue – what are the building blocks and levers for growth? What expenses need additional investment? Which can be reduced?
Business goals – when you create a detailed budget, you have specific numbers that you are targeting. You have the opportunity to track progress as frequently as you wish – and make adjustments as necessary. You have causes for celebration and causes to dig deeper in other areas. Without a budget, your actual financial results have little relevance.
Long-term success – the practice of creating and tracking budgets has implications to your business’s future positive results. Involving your team, scrutinizing your business, comparing actuals vs. budget, making adjustments, setting stretch goals, investing where you should – all of those add up to a thriving business that’s in growth mode.
Don’t leave your budget to a cocktail napkin. Not sure where to start? Contact us.