You know you need to create a budget that matches your businesses strategic plans and ongoing operation; however, time doesn’t always allow the proactive budgeting process to take place. In the end, you wind up with either a last-minute budget tossed together in the third week of January, or perhaps no budget at all. But having no budgetary guidance is risky to say the least.
The Purpose of a Well Thought-Out Budget
As integrators, we tend to be very proud of our businesses; therefore, we often believe we can make tremendous strides in a very short period of time. While this most certainly can happen, it’s more the exception than the norm. With growth expectations that are too far overstated, it can make the budgeting process a complete waste of time.
Taking into consideration current trends, new projects, strategic initiatives, and the changing regulatory environment, a budget can serve as the roadmap for a business that is attempting to meet its profit, cash flow, and continued overall growth goals.
An (Inside) Outsider’s Perspective
Do you want to know why so many budgets miss the mark? It’s because they aren’t given proper attention, and the creators (you) are often too close to the situation. While it may seem that being close to the situation would serve as a great benefit for the budgeting process, a good budget often needs some outsider perspective. A CPA can be a great resource during the budget-planning process.
Your CPA will know about your business, but will also be far enough removed that he/she can ask questions you may be forgetting to ask. For instance, have you accounted for the rising cost of health care? Are you prepared for the cash requirements during month 6 when you hire those four new employees? An eye that hasn’t been looking at the plans and numbers every day can provide some terrific input into the budget process, pointing out details that would really hurt if missed.
When to Get Your CPA Involved in the Budget
The budget process can take anywhere from a few days to a few weeks, depending on the size of your business and the detail you plan to go into. If you’re looking for the benefits that come from involving your CPA, then you should try to get him or her involved as early as possible. Engaging a CPA in the middle of the process will make it more difficult for him or her to help; early involvement will provide more clarity on the goals of the process. CPAs can also hold you accountable to timely completion of the budget process.
It’s easy to put off budgeting. It takes time, it takes resources, and it doesn’t feel like it shows an immediate return. But the best businesses I work with all take the budgeting process seriously.
By Bronswick Reicin Pollack, Ltd. Managing Partner and CPA Jeff Bronswick