“A bud­get is telling your mon­ey where to go instead of won­der­ing where it went.” – John C. Maxwell

This quote has been my per­son­al mantra many times over, and it is equal­ly impor­tant for busi­ness as well as per­son­al finances.  Bud­gets may take some time to pre­pare, espe­cial­ly if you’re start­ing from scratch or you have a lot of vari­ables.  How­ev­er, a care­ful­ly thought-out bud­get is a crit­i­cal tool to nav­i­gat­ing your busi­ness to prosperity.

As pow­er­ful as your bud­get is, it can have an even greater impact on your deci­sion-mak­ing abil­i­ty when paired with a fore­cast.  Think of a bud­get as the tar­get that you are shoot­ing for, while a fore­cast is your rea­son­able pre­dic­tion of what will hap­pen.  If you pic­ture your busi­ness life cycle as a road trip, your bud­get is the X on the map, and your finan­cial state­ments are the “You Are Here” stick­er.  The fore­cast­ing process is ask­ing the ques­tions, “Are we there yet?”  “How many miles left to go?”  Maybe you’re ahead of sched­ule and you can take a rest stop – or maybe you need to pick up speed to get to your des­ti­na­tion on time. 

The key is mak­ing your bud­get and fore­cast work for you.  Once you have them both mapped out, you can com­bine them into a sin­gle spread­sheet and update peri­od­i­cal­ly through­out the year.  As each month pass­es, replace your fore­cast­ed num­bers with the actu­al data.  What this process achieves is the abil­i­ty to mon­i­tor your progress and make course cor­rec­tions as you go.   The results you’ll see may sur­prise you!