Budgets, Budgets, Budgets.

How are you making decisions in your business?  Many decisions involve soft skills and subjectivity, especially in the world of HR, Operations and Marketing.  But even in these areas, Finance is always lurking in the corner waiting to be overlooked.  Small decisions every day add up, and evolve into new ways of doing business and systemic changes to your business.  But aside from that, what about bigger changes?  When you consider taking on a new client or new line of business, are you really looking at the true financial risk/reward of this growth?

Can you count on this business to fund itself, or will you have to fund it out of your current operating cash flow (most likely)?  How much cash will it take to get over the hurdle?  30 days?  60 days?  90 days?  Have you taken a look at the weekly cash requirements for this new venture, overlaid them on top of your current short-term and long-term cash projections, and really assessed the best and worst case scenarios?  You should at least be aware of potential worst case scenarios, so that you can examine their causes and take preemptive action to squash their potential.

Most business owners don’t really put the numbers to paper to evaluate new business initiatives or the impact of new clients/growth.  It can cause big problems.  I’ve seen it first hand.  It really comes down to this: Budgets are the basis for strong financial decision making.

If you’re wrestling with a potential new initiative and want to chat or just aren’t sure how to put together a budget, give me a call (314-574-1352) or shoot me an email.  I’ll get you pointed in the right direction, no charge.

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