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Budgeting is one of the biggest challenges facing small businesses. Often times the person that starts a small business is good at whatever type of business they start but when it comes to the financial end of it they fail. This is why lack of capital and bookkeeping are two of the biggest reasons why a business will fail.
The All Business Blog has a great entry on 8 Budgeting tips for Small Business.
Since yesterday we talked about technology, one of the important things to remember is that budgeting should be easier than ever today with the software that is available in the marketplace. While items such as Quickbooks Pro is very popular Intuit the maker of Quickbooks also makes a version of the personal budget software called Quicken Home and Business that many small companies could use.
The great thing about these software programs is that they are easy to learn and use. There is no excuse for not having some basic budgeting software on your computer.
One area I will agree with is number 5 that says don't budget to the last penny. I feel you need to start with zero add in your revenues then subtract out your expenses. Not doing it to the last penny will leave some fidget room that could lead to problems in the long run.
One thing I would add is to be conservative with your numbers. It is much better to be conservative with your budget that too optimistic. If you are conservative and do better that is good thing but if your too optimistic you could end up hurting yourself.
Many transit agencies across the nation are figuring that out after budgeting for sales tax increases because numbers were good for many years running and were caught with their pants down when numbers tanked in the recession.
The success of your business depends on how well you budget. Your success depends on your budget.