Common Mistakes Business Owners Make When They Budget

When you are preparing your budget for your business there are a few common errors business owners make.  You want to avoid overthinking your budget.  Your budget is a guide, they are not plans for a house. 

The biggest mistake is not doing a budget.  Followed closely by doing a budget because it’s what you’re supposed to do as a business owner.  Going through the motions will not guide your business, your budget is not there to restrict you, it’s keeping you on track so can you achieve the success you want.

You want your budget to be achievable. Achievable means about 50% attainable.  You don’t want it too easy to meet, but you don’t want it too hard to acquire. The goal needs to be ambitious enough to motivate you.

You don’t have to account for every expense item, again these are a guide.  Have a look at last year's expenses to get an idea of what to allow for.  Don’t make it too rigid, you need to have some flexibility.  What you expect to happen now, might not happen in six months.  I think we all saw how COVID-19 affected our budgets.

The most important aspect of any budget is to review and update as the year progresses.  There are opportunities that might present themselves during the year and you need to be flexible and revise your budget to accommodate them.

Not sure where to start when preparing your budget?  Get in touch with your accountant, they should get you on the right path.