Episode•May 9, 2023•22 min

Mastering Business Budgeting - The Ultimate Guide to Having Money in the Bank | Ep. 227

Struggling to keep your business budget under control? Learn the importance of budgeting, the steps to create an effective budget, common mistakes to avoid, and strategies to stick to your budget to make better financial decisions for your business. Every Tuesday, Tiffany answers one of your submitted questions. To submit a question for an upcoming episode, visit here: https://www.moneytalkwitht.com/asktiffany Resources & Links Business Money Makeover 3-Month Program Connect with Tiff Blog Facebook Twitter Instagram LinkedIn YouTube Pinterest This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Business budgeting enables anticipation of future expenses and revenue
Track monthly income and expenses to identify what worked and double down on successful strategies
Use past performance data to forecast future months and set realistic revenue targets
Budgeting provides a framework for making informed business decisions
2
Create both bare bones and ideal budgets to understand survival vs. growth needs
Bare bones budget covers essential personal and business expenses needed to survive
Ideal budget includes all nice-to-haves and growth investments
Break large monthly numbers down by day to make goals feel achievable
3
Track expenses throughout the year rather than waiting until tax time
Waiting until December to categorize expenses means discovering problems too late
Monthly tracking allows for real-time adjustments and course corrections
Early detection of unprofitability enables timely strategic changes
4
Build contingency plans and buffers into every budget
Include room for unexpected expenses even if you know your bills down to the minute
Account for quarterly and yearly expenses that might be forgotten
Have a plan for what to cut if revenue targets aren't met
5
Use daily tracking tools combined with monthly financial statements
You Need a Budget for daily expense tracking across personal and business
QuickBooks for monthly, quarterly, and yearly reporting and categorization
Regular review of profit and loss statements and balance sheets to monitor performance

Intro

Tiffany answers listener questions about business budgeting in this extended Tiffany's Take episode, addressing a topic that small business owners frequently ask about.
Tiffany is a financial coach and host of the Money Talk with Tiff podcast who transitioned from focusing solely on personal finance to also helping small business owners with their finances after repeated requests from her audience.

Business Money Makeover Program Submit a Question

– Why Tiffany Started Covering Business Finances

Tiffany explains that after repeatedly being asked about business finances despite initially focusing on personal finance, she decided to lean into the demand and share her knowledge with small business owners.

Instead of fighting the wave, I'm just going to lean into it. So that way I can share my knowledge with other small business owners.

– Importance of Business Budgeting

Tiffany outlines five key benefits: anticipating future expenses and revenue, cost planning and forecasting, providing a decision-making framework, identifying overspending or underspending, and securing funding from lenders and investors.

It could be the determining factor when it comes to securing funding.

– How to Create an Effective Business Budget

Steps include: assess current revenue and expenses, forecast future expenses and cash flow, set goals based on data, develop a contingency plan, and create both bare bones and ideal budgets.

When I first started my entrepreneur journey back in 2019 as a full-time entrepreneur... it was $50 a day. That's all I needed to survive... And when I said $50 a day, I was like, oh, I could do that easily.

– Budgeting Mistakes to Avoid

Overlooking unexpected expenses and failing to account for quarterly/yearly costs
Failing to track expenses throughout the year (waiting until December for taxes)
Not having a cushion or buffer in the budget

If you wait for the end of the year and you look back and you haven't been profitable since April, then it's an issue.

– Strategies for Sticking to Your Budget

Use budgeting tools like You Need a Budget for daily tracking and QuickBooks for monthly reporting
Regularly review financial statements (profit and loss, balance sheet)
Cut costs wherever possible based on data
Monitor performance consistently

When I'm doing my budget, for instance, I do it along with my personal budget. It only takes me maybe five to 10 minutes a day.

Resources

Business Money Makeover 3-Month Program
You Need a Budgettool
QuickBookstool

Topics

business budgetingsmall business financefinancial forecastingexpense trackingprofit and loss statementscontingency planningQuickBooksYou Need a Budgetbusiness grantsentrepreneurship