Making Your Budget Work for You: The Usefulness of Financial Statements
Everyone knows what a budget is, but very few understand how to effectively create one. It’s very easy to become absorbed in the day-to-day, relying on tactical decision-making and quick, short-term financial calculations to guide our businesses.
By gathering information about our customers, about our costs and about how we spend time, we can make better, more strategic decisions to leverage our budget. In turn, the budget becomes a valuable tool rather than a hindrance or obstacle.
Our definition of budgeting
The first step in effective budgeting is developing habits that assist us in gathering relevant data. These habits do not have to be grandiose schemes or involve complicated software. They can be as simple as making notes on the back of your copy of invoices itemizing all of the time spent on a job. Maybe you’ll then put the invoice copies in a file and pull them out once a month to summarize them on a spreadsheet.
Do whatever works for you.
The most important thing is consistency. If you like doing it, you will do it consistently. Remember that you will like it more as you glean benefit from the information you track. When you feel the correlation between the habits and the rewards, you’ll naturally feel more pleasure in the habit.
It is as simple as putting numbers to your activities. If you are paying bills and invoicing using an accounting system, you already have information you can use to evaluate your actions with. Unfortunately, the majority of business owners do not know how to take advantage of this information.
That’s where I come in … as an advisor, my goal is to make the information that is available relevant to you as an owner and to motivate you to develop habits to track and use more information.
At first glance, my business-owning clients are frustrated by and not intuitively drawn to the information. But by presenting the information in ways that resonate with them, they are ultimately drawn to the data when they realize that it has the potential to boost innovation and productivity.
What activities can you begin evaluating today? Do you want to begin with how you spend your time or with your marketing? Do you know your customers and who they are and what they care about?
Budgeting isn’t just about creating a plan—it’s about developing habits that make tracking and evaluating data simple and consistent. Whether analyzing time spent, marketing efforts, or customer behavior, the right habits can turn a frustrating chore into a powerful tool for innovation and productivity. As your advisor, I’m here to help you connect the dots and make your financial data work for you, turning your budget into a source of clarity and growth.
