Budget for Growth. Put your Money to Work!
No one likes to be limited – least of all business owners and leaders.

Restrict. Limit. Constrain. Confine. For most people, these are what usually come to mind when you hear the word budget. You have probably set up a personal budget that helps you control your spending. The government is encouraged to “balance” their budget, which requires cutting costs. No one likes to be limited – least of all business owners and leaders.

A business budget is not for limiting your business, but it does equate to something that is required for growth – a plan. A business budget is a plan to help you reach your goals. Every business has goals. Maybe the goal is to make more money at the same level of revenue, maybe its increasing revenue, opening a new location, or even making the business look good for a potential buyer. Maybe it’s untying you from the daily operations of the business. It doesn’t matter what the goal is, the key to achieving it is having a plan and monitoring that plan. In business, the biggest part of that plan is your budget. Where your money is coming from and where your money is going are the best indicators of how well you are following your plan and how well your plan is working. It is also the best indication of when you need to change your plan.

Consider this, as a pilot you will definitely have a flight plan. The flight plan specifies not only where you are going but how you are going to get there. On the way, you monitor your progress against the flight plan. You make sure you are seeing the landmarks you should see. You make sure you are headed in the right direction at the right altitude, and that you have enough fuel in the tank to get there. A budget accomplishes all of these things for your business. Your landmarks may be monthly revenue targets or profit targets. Your direction and altitude are the trendlines of your revenues, expenses, cash, and other financial indicators. And your fuel is your cash – how much are you using, how much is coming in, and do you have enough to get where you want to go. From there you know what you can invest in the business, or how much you need to borrow to make it through slow times.

If you focus on your current limits you will never reach your goals. But if you focus on your goals you are only limited by what you can achieve.

The majority of your expense expectations should be set to reach your goals, not limit how much you spend. How much marketing and promotion do you need to reach your revenue goals? How much will your payroll need to be to meet service or manufacturing needs? What goals will your employees need to achieve? Who will you need to hire? How much will you need to spend to keep up with technology needs and keep your employees efficient? How much accounting and consulting help will you need?

The fact is that if you don’t spend the amounts you need to, you won’t meet your goals.

Budgets are a reference point. Many people use the prior year as this reference point, but don’t you want to do better than your prior year? Using the prior year as information when developing the budget is okay, but relying on it to achieve your goals is a recipe for mediocrity.

A budget is also not a static document that you stick in a drawer and check at the end of the year. It is a working document that you review each month to make sure you are on track. It should be scalable. Are you making more than you expected? Your budget should be adjusted to reflect the additional amounts you will need to spend to support your growth. Are you making less than expected? Let’s readjust to determine what is working and what isn’t, and make sure the rest of the year goes as expected and poises you for future success. What are your cash flow expectations? How much will you spend on new equipment? Is the cash flow to the owner going to be sufficient? A well thought out and professionally prepared budget can answer all of these questions and more.

When you partner with Apex we take a very methodical approach to your budget

  • First, we work with you to determine your goals and expectations for the upcoming year
  • Second, we construct a baseline budget from historical information, adjusting for the goals and expectations
  • Third, we review the final product with you and publish it along with the related assumptions and goals
  • Fourth, we track progress throughout the year against your actual results and adjust as necessary to make sure you are achieving your goals

Your first step to a growing business is to Budget for Growth!

— Lucas VanDeWoestyne, Apex Executive Division Leader

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