The Truth About Budgeting
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
Do you find yourself dreading budgeting? Some may even ask: how important is a budget? To quote the co-founder of BUDGETO, Charles Hubert, “You may not succeed as an entrepreneur because you have a budget, but you will undoubtedly fail if you don’t have one”. Thankfully, for every problem, there is a solution! Here’s what we’ve learned from Charles.
What’s business budgeting and why is it so hard?
When you think about it, business budgeting is simply translating your business project into numbers to validate that it makes sense financially. And then when you actually start your business, it keeps you in check for achieving your goals.
There is a perception that budgeting is complicated, and many entrepreneurs are intimidated by it…maybe not the numbers themselves, but all those calculations that come along with building the budget. It’s understandable: unless you are an accountant or finance specialist, how would you know all the rules to build and manage a budget? Not to mention confusing lingos like amortization of your capital assets, debts schedules, recognition of your revenues, and so on. And don’t even get me started with building a balance sheet, an income statement or a cash flow projection. Is sweat dripping down your face yet?
The tools to build budgets also added to the challenge. Gone the days when spreadsheets are the only option to manage budgets. The problem with spreadsheets is that they are not standardized and prone to errors. Close to 90% of spreadsheet documents contain errors*. So when entrepreneurs use them to build budgets or when investors analyze those spreadsheets to make investment decisions, it could have detrimental impacts.
The Solution: Easy Budgeting Tools for Business
The good news is budgeting can be easy. There are tools available to help entrepreneurs tackle this challenge. Here are some major benefits and features of budgeting tools for business:
- Enable entrepreneurs to easily understand and build budgets themselves
- Automatically integrate all the calculations needed in a budget, such as income tax, sales tax, employer contribution rates and capital assets categories, etc.
- Help you manage financial projections, such as creating a 5 year pro-forma budget and answering requirements from your stakeholders.
- Map out various scenarios and share your budgets online with partners of your choice.
- Import automatically your Historical Financial Data into your budget.
Those tools are designed to meet all the expectations of investors, making it possible to fill the gap between entrepreneurs and investors by allowing them to speak the same language, therefore accelerating access to financing and launching new businesses.
There are plenty budgeting tools available online if you do a quick Google search. When deciding which one suits you, make sure to keep in mind your specific needs.
Budgeting is not an entrepreneur’s enemy – it’s your best friend. Thankfully, with technology, you may finally become friends with it.
Ready to start your business? Ownr is here to help! If you have questions about how to register or incorporate your business, give us a call at 1-800-766-6302, Monday through Friday from 9 am to 5 pm EST, or email us: email@example.com.