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The Dog Ate It (and Six Other Excuses For Not Having A Budget)

Author: MargotBrandlin
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If you own your own business, no doubt the end of the year brings you not just the holidays, but a lot of work to complete. You're probably thinking about wrapping up the books, selling any investments, organizing documentation for your taxes, setting your employees' benefits up, and creating your budgets for next year.

When your list is particularly long, one specific task might seem to loom quite large. If this happens, it's likely that you procrastinate. And one particular area of procrastination is the budget. In fact, many business owners are so determined to avoid putting together their budgets that they'll do just about anything to push it under the rug.

Here are some of the excuses I've heard, and why they just don't hold water.

Excuse 1: Budgets are too specific; I can't be expected to stick with my initial estimates for a whole year. In fact, though, even though you've created a budget, it doesn't mean you've done so in stone. The budget is yours and no one else's. It's not a legal document that binds you to any promises, nor have you made a blood oath (I hope) that you would honor it to the letter. In fact, some estimates say that almost 80% of companies who create budgets don't change them even a bit during their fiscal year. However, that attitude is not realistic. Not only can you change your budget, you should change it as circumstances make it necessary. You can also budget for a shorter time frame if that works better for you, such as per quarter instead of for the entire year.

Excuse 2: If I have a budget, I can't be as flexible in the event of a crisis. In fact, if you have a budget in place, you'll tend to be more proactive and flexible, not less. This is because a budget can help you foresee problems and take steps to stop them, sometimes before they even actually occur. Or, if problems do occur, you can probably catch them earlier while still small and therefore much more fixable, before they become full-blown crises.

Excuse 3: It's too complicated to go through setting up a budget. In fact, this is a reality for many companies, but it doesn't have to be true. Even though many companies spend a lot of time sweating over their budgets and may even devote as much as 20% of their management's time to budget creation, this just doesn't have to be true. It's true that a certain level of detail is necessary in order for budgets to be effective. However, budgets can be pretty simple and still function just fine. Whatever time you invest in planning your budget, it's not wasted. You'll save time by being prepared for what may come up down the road because you've got a budget; when the time comes for you to make a decision on the spur of the moment, you'll know what to do, because you took the time to prepare.

Excuse 4: My industry is in flux and ever changing, so I can't commit to a budget. In fact, every industry is in flux at every moment. Your industry is the same as every other, and you need a budget regardless. Of course, you can't predict unknown events, such as if gas prices will rise, whether laws will be passed that will impact your profit margin, or whether you'll need to hire new staff, but you can still use a budget to plan and set goals over the long haul. For this, you need to plan to take action at given times, which is under your control. You need to be able to look at your business with a critical eye and decide what you want to achieve in the next 12 months. If you can't do that, then it's time to sit down and figure out why that's true.

Excuse 5: Budgets don't mean anything, because everybody just plugs numbers in that will paint the best picture possible. It's true that if you create a budget that isn't based in reality and is based upon pipe dreams, you're going to set yourself up for failure instead of success. In fact, one Internet poster likened the budgets to pornography, calling them, "a fantasy about how the author would like the world to look, having a relationship to reality as the world, designed to too late, stimulate and motivate the reader, but ultimately resulting in a sense of alienation and despair." If this describes your budget, it's of no use to you. Your budget should be based in reality.

Excuse 6: I have a budget that I keep in my head instead of on paper. Of course, it's good if you can keep a running total of a few figures in your head for quick access if you need them. However, it's not realistic to be able to do this for every expense, number and project. You might be able to do it for a while until your business reaches a certain size, but eventually it will be too much to keep all the details straight just in your head. In addition, if you have people working for you, you're keeping them from taking some responsibility and accountability for your business' success or failure along with you. Even if you think you're of a small enough size that you don't need a budget right now, you will someday. Start good habits now and begin to keep one while your business is small so that it will be second nature when your business grows.

Finally, remember that a budget is really just a plan. It makes you step out of the small details that bombard you on a daily basis and forces you to look at your business from a strategic standpoint, so that you have to take note of where you are in comparison to where you want to go. If you don't establish a budget as a formal tool to prod you into action, it's likely that you'll put it on the back burner in favor of dealing with the other problems that crop up daily and demand you take care of them.

So what's your excuse? Did your dog eat your budget? Do you need to vacuum your overstuffed sofa so that you won't have time today? Did your mother-in-law coming to visit from Idaho? Or are you ready to stop making excuses, sit down and get to work?

About the Author

Author: Margot Brandlin is a Minneapolis Bookkeeper and freelance writer for OWL Bookkeeping and CFO Services. Owl has a Bookkeeper in Minneapolis eager to take on your business finances.