5 Budgeting Mistakes That Could Be Costing Your Business Money

With the new year on the horizon, it’s a great time to start thinking about your next year’s budget. Depending on how your business’s fiscal year runs, you may already be in the preparation or planning process for the New Year. Keep these costly budget mistakes in mind as you work through your planning sessions.

1.) Failure to have a written budget – without a written budget or with no budget at all you’re setting your business up for failure. Your business loses money when there’s no budget in which to use as a guide in running your organization. Failure to have a budget runs the risk of high costs and overspending. Also, without documentation, it’s hard to remember what your assumptions and thoughts were when you first put the budget together.

2.) Costs are budgeted too low – entrepreneurs tend to underestimate the business costs in their budgets. This is usually due to not properly tracking expenses on a regular basis. When you don’t track the costs in your business, you’re not aware of trends that are occurring in your business. Additionally, entrepreneurs often times are a little too conservative, instead of expecting the unexpected and adding a little percentage increase to each cost item.

3.) Not managing cash flow – every business has a cash flow, a certain trend in which money flows in and money flows out, an infusion of major cash, or months when there’s very little cash in operations. If you aren’t monitoring the cash flow, you’re not aware of when to expect cash based on the types of products and services you provide or based on how you are paid throughout the year. When the cash flow is not taken into consideration in the budgeting process, you’re apt to overestimate the amount of cash you will receive in a given year.

4.) Ignoring the unexpected - one very common budgeting mistake of many entrepreneurs is not thinking of what can possibly not go as planned causing a dip in revenue or a surge in costs. It’s great to be optimistic in your budget, but you should also factor in those unexpected costs, or a surge of new clients and sales that may also incur more costs and revenue as a result of growth. There’s also a high tendency to underestimate or not factor in taxes which could set you up for a high tax bill that you didn’t anticipate.

5.) Failure to include as a part of your yearly planning process – every new project, every goal, and every objective in your business has a money implication. Failure to make budgeting a part of your yearly planning or goals strategy sessions, is a sure way for losing money in your business.

Avoiding these common budget mistakes will help you to keep more of the money you make in business and will also aid in running your business more efficiently!

The Part Time CFO’s Starter Guide to Successfully Selling Your Business

Is this the wrong time to think about selling your business? Is it too tough in today’s economic downturn? Many business owners think so, even if their business is trending well. What they don’t realize is that, rather ironically, during times when irrational fears keep many sellers from bringing their companies to market, pent-up demand by buyers creates a robust and welcoming marketplace for those that are for sale. Part time CFOs continue to see not only more viable buyer inquiries, but buyers that were once pursuing larger companies are now showing genuine interest in businesses with under $50 million in revenue.

The answer is no, this is the perfect time to sell. As a business owner myself, I know that selling a business is a major life decision. An owner should only come to the decision to sell after a period of great reflection, so that they’re both mentally and emotionally prepared to transfer their company to new owners and move on to other pursuits. And who among us couldn’t benefit from:

• More free time to spend focusing on your family, friends, or other hobbies and pursuits

• Less stress, and less time feeling like you’re not living your life to its fullest

• Peace of mind, knowing that a reliable, professional Partner is helping to sell your business

If any of the above sounds good to you, then you’re ready to sell. An interim CFO or Part Time CFO will help you determine if your business is on an upswing. Does it have, as I like to say, ‘legs’? Bear in mind this isn’t just trying to time the sale perfectly or wanting to sell at the ‘peak’-most people only know when the peak has occurred six months after the fact-this is a complete evaluation of how the business is performing as well as its outlook for the next 12 months. If your business is doing well and appears to be growing, even modestly over the coming year, we believe selling your business is a sound choice.

Part time CFOs can help build your company’s value from day one, empowering you to create a successful exit strategy with the full weight of our wisdom and national partnerships behind you. We’ll even help train your staff to better understand accounting and business practices, generating higher job satisfaction, less turnover, and better job performance, making your company stronger, and your exit an even more welcome eventuality.

Why should you focus so heavily on building value? Think of it this way, if you were purchasing a business, wouldn’t you want to know how much of the company’s cash flow would ‘stick in your pocket’ after the sale? The inherent value that an interim CFO helps create makes your company more attractive to potential buyers. And the desire to make your business a highly sought-after commodity isn’t just our CFO Job, it’s in our DNA.

We know that you’ve devoted an immeasurable amount of work and resources into growing your company. With all that you’ve invested, doesn’t it make sense to do some financial planning and develop an exit strategy that protects the wealth you’ve accumulated? Exits are a process that can occur over years, and they take time, planning, resources and forethought, but how are you going to align your goals for the future and reap the rewards for your years of hard work if you’re too busy worrying about the day to day?

You should consider letting a part time CFOs help in successfully selling your business. Now’s the time to develop a solid exit strategy and retirement plan, generating security for you and your loved ones for years to come. Because let’s face it, life doesn’t end once you exit the company. So start planning for your future today-it’s free, it’s easy, and there’s never been a better time. Visit our website exit-strategy.b2bcfo.com to find out more.