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!