Bob Gauvreau says a budget is the most important financial tool for small business. It sets revenue targets and tracks costs in three main areas: advertising, staffing, and inventory. A budget lets you know if you're on track to hit your goals.
So let's talk about creating a budget for small business, and I'm going to take a step back here and just say, if I had to give advice for the number one tool that could support financial performance in a business and the success of that business, it would be creating a budget for that business. So let me talk about what a budget really is. If you've got a small business and you're looking at getting or building $100,000 or $1 million in revenue this year, what are the costs that you're going to incur associated with getting to that You're likely going to have to incur some advertising costs, some staffing costs. If you're in manufacturing or you're reselling, you're going to have to have product costs, inventory costs associated with getting there. So what we do with a small business is we establish the destination of where we're trying to head, and the budget gives us a framework and a benchmark for us to see if we're on the right path.
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