Building a Business Budget

I occasionally get emails from readers who runs small businesses--rather well, as often as not--but who have a hard time drawing up and sticking with a budget.

It's like a household budget--no one's ideal of a jolly time. But there are a few ways to mitigate the sting and make a business budget more workable:

* Accept that it's a work in progress. Be ready to adjust numbers as experience dictates insight.

* Be prepared to be wrong--at least at first--see the first item.

* Err on the cheap side. Better to have too much money on hand than too little to meet your obligations.

* Build up a cash cushion. To make your budget more effective and, ultimately progress from a more conservative approach to a bit more aggressive, start out by stocking up on cash reserves whenever possible. Not only can that money come in handy for predictable expenses such as year-end taxes, it also can prove an absolute lifesaver should an unexpectedly high bill suddenly crop up.

* Ask for help. Know of another small business with an airtight budget? Pick their brains to see how they made it work.

* Review, then review some more. Folks with whom I've spoken who know much more about
this than I suggest at least a monthly review to track cash flow, expenses and other details.

* Above all, stay with it. You know an effective budget is essential to your success--allow enough time for it to take shape and mature.

Jeff