When you’re first starting a business creating a budget may seem like the last thing on your mind. Unfortunately it usually gets pushed back along with the other paperwork that is actually vital to your business’ survival and growth. The reality is an updated and truthful budget will facilitate business expansion and ease the pressure of managing your daily cash flow. Here are our top three reasons you need to budget in your business:
Managing your cash flow
By creating a budget you are able to record your daily expenses and income over an extended period of time. This information will allow you to predict what your costs may be over a few months ultimately allowing you to develop a realistic and probable budget. Cash flow forecasts will help ease the pressure and stress on you as it becomes less and less likely that expenses will just pop up.
Measure your performance and success
Budgets can become a valuable measurement tool to review your current performance. For builders this can help your current estimating processes as you’ll begin to see if your estimates are accurate or outrageous. You’ll also be able to review the return on any current investments through your profits and income.
Plan for growth
Effective budgeting will reveal your profits weekly, monthly and annually. While this would act purely as a guide, it will indicate what numbers you can expect to see over time and allow you to begin growing. You may decide to invest in new equipment and technology, expand your team or begin operating in new areas. All these options will help your business grow at a steady pace and improve your profitability.
When you begin budgeting it’s important you are honest about all aspects of your business. There is no point in exaggerating profit or decreasing expenses for appearance sake. If you are dishonest in your budgeting or any of your accounting, you will only harm your own business and its chance of survival.
At Hotondo Homes our builders have access to finance management and bookkeeping training to help manage their accounting. They also have access to our Finance Team who is there to assist with any challenges that may arise. They offer guidance through reporting, budgeting and also managing Home Warranty Insurance.
Want to know more about joining Hotondo Homes? Contact us now.