What Can You Gain From Budgeting for Your Business?

Why budget for your business? If you have someone telling you that your business needs a budget, but you think you know better - here are some tips on why you might be wrong!

Dear CFO:

My banker tells me I need a budget. But I know how to run my small business. Budgeting sounds like a waste of time to me.

What would I gain by budgeting in Portland?


This is certainly a common complaint and not just from small business owners, but from employees of large corporations as well. Frequently, team members view budgets as a painful and unproductive process. So, why bother with a budget?

CFO’s and small business owners need to bother with budgets because a good budget process supports the company’s goals and enables a company to achieve higher profits. Good budgets allow for a view of the financial future and in doing so, provide accountability for team members by making clear to them the fiscal expectations of their work.

Why Should You Budget For Your Business?

The ideal budget process sets the stage for:

  • understanding the goals of the company, both short and long term,
  • problem-solving and reaching goals creatively,
  • identifying potential financial problem areas,
  • setting financial goals for team members, and
  • evaluating expected performance against actual to refine assumptions.

There are two common approaches to creating a budget. In a top-down budget, management defines the budget and sometimes over-rides assumptions built by team members or may force a team to accept cost reductions. In bottom-up budgeting, team members build assumptions accumulated in creating the total budget. In reality, good budgets aren’t strictly one or the other, but a combination of the two.

Why budget for your business? A budget is very valuable - and here's why. A good budgeting process requires management begin by conveying a clear picture of the company’s goals. Team members closest to the work often have the best understanding of what parameters will work and which ones won’t. They often provide the best insights into cost cutting, streamlining and revenue growth, which is why it’s usually in a company’s best interest to involve the team in the budgeting processes to some extent.

Good budgets focus on long-term goals within short-term financial constraints. Budgets set guidelines for the costs associated with achieving objectives. This doesn’t mean a quick fix, like simply adding 10% to last year’s actual numbers or taking 20% off the current budget. This means building a plan to meet a company’s objectives given the financial constraints of that company. It is the financial roadmap for the next year.

In short, whether you’re running a business in Portland or anywhere, you need a budget to get the full lay of the land. Budgeting falls into the best practices for business and it’s just as vital to your growth as a business plan. If you’re struggling with where to start your business budget, there are resources to help you begin. For those who are more vision oriented than number-savvy, bookkeeping is a great service to outsource. Find freelance bookkeepers on sites such as Upwork and FlexJobs.

Best of luck with your budget in Portland!

Why GOOD Accountants Are Worth the Investment

“Your accountant costs how much?”

Now there’s a phrase I’ve heard repeatedly between business professionals.

Here’s another phrase we’re all familiar with: “You get what you pay for.”

When it comes to accounting, there’s no substitute for experienced, professional oversight on the financial and operational aspects of your business. Unfortunately, many business owners and CEOs don’t fully understand what constitutes actual accounting, not to mention the huge benefits of hiring a good accountant.

The Difference Between a Bookkeeper and an Accountant:

This is an important distinction. Some business owners refer to the person who pays the bills (accounts payable) and handles customer payments (accounts receivable) as the company accountant. While important to your day-to-day business processing, this clerical position is historically referred to as a bookkeeper. This isn’t your accountant.

So, what’s the difference? A true accountant is analytical, not clerical. An accountant analyzes how to best use money across your entire operation to grow your business and maximize profit.

Most importantly, accountants save you money. An accountant’s objective is to pay attention to your money. The goal? To increase your bottom line and improve your business’s profitability.

It’s not about how much you’ll spend for a good accountant; it’s about how much it’s costing you NOT to have one!

How a Good Accountant Saves You Money

A great accountant is worth their weight in gold. A good accountant will save you money by:

1. Improving Cash Flow

  • Accountants help you get a full picture of your bottom line by reporting on current cash flow, and projecting future cash flow. (Remember: Cash is King!)
  • A good accountant not only anticipates cash flow problems, but also manage real cash flow issues when they happen. When you’re in a pinch and need money in the door, they’ll find ways to collect on outstanding A/R faster and know which payments can go out the door a little slower on the A/P side.

2. Enhancing Strategic Planning

  • Accountants don’t just assist with creating strategic operating plans, but they know how to convert those plans into budgets. Trouble turning those sometimes-fuzzy goals into hard numbers? Accountants make it happen!
  • Do you know which of your products earns the most money? Or what sector of your customer base is most profitable? Accountants evaluate your products, services and customers to create a frame for product line profitability (PLP).

3. Creating Meaningful Financial Statements

  • The bank cares about your Balance Sheet and your Cash Flow. If you aren’t prepared to report on these elements with the level of knowledge and detail they expect, then you need a good accountant to help!
  • On the operations side, you get meaningful and useful PLP reporting and overall financial analysis to become more profitable. The bottom line: you’ll discover big places to start saving money!

So How Do I Find (and Hire) a GOOD Accountant?

Are good accountants worth the investment? If you want your business to succeed - and make money - make sure you're investing in the right people!

There are a few options for hiring: hire an internal, full- or part-time individual accountant or hire through an outside accounting firm. If you opt for the later, keep in mind: not all outside accounting firms are created equal! In fact, many clerical bookkeeping companies refer to themselves as “accountants” but don’t offer the full range of services you’ll need for your business.

No matter which hiring option you choose, there are universal qualifications to look for:

  • Good Recommendations: Ask around at networking events or ask your trusted business partners whom they use.
  • Priced Mid-Range or Higher: Salary shouldn’t be the main driver. We are back to the “you get what you pay for.”  If an accountant’s price is too low, you may actually get less value than if you paid a bit more. Remember a great accountant saves you money in the long run.
  • A Certified Public Accountant (CPA) Title: It’s important to keep in mind, this is only a pre-qualifier.  A CPA title doesn’t mean a particular accountant is a good fit.
  • Experience: We all start somewhere, but when it comes to your money, you need someone you can trust. Review their résumé and look for a consistent work history.
  • Good References: On a similar note, always ask for references and follow up with them. Again, this comes down to the,” trust but verify,” mentality. Don’t skimp on your due diligence.
  • Tax Knowledge: While I highly recommend hiring an expert tax specialist to do your actual taxes, your inside accountant should have rudimentary tax knowledge, at minimum, to ensure accurate and adequate compliance with tax law.

A good bookkeeper is critical for keeping track of the day-to-day account management inside your business. However, good accountants will “monetize your knowledge” to help improve your financial strategy, give you a deeper understanding of your businesses growth opportunities, and simply increase your profitability. So, don’t underestimate the real value in hiring a good accountant!

Ask your colleagues and network who they use and trust, Chances are you’ll receive many recommendations for an accountant to take your business to the next level. Remember, a great accountant eventually pays for themselves. Invest in an accountant and you’ll thank yourself down the road.

For more best practices every CEO should know, follow our blog. We’ll give you tools and tips to keep your business thriving!

How to Make a Small Business Budget Plan

how to make a small business budget plan

Dear CFO:

As a small business owner, I know (and my bank advised me) I need a budget. I’m overwhelmed and don’t know how to begin.  What do I need to do to create a successful budget for my business?

Confused about budgeting basics in Phoenix.


It’s certainly best practice to create and follow a budget for your small business. Getting started is simple, if you understand the basic concepts behind budgeting.

Effective small business budgets capture and reflect the costs necessary to meet a company’s goals.  It’s a matter of tracking what comes in and what goes out. To understand the costs of running your business, start with what you spent in the past and the relationship to the revenues of the company.

Revenues are impacted by more than simply increasing product sales.  Revenue may be affected by customer retention, entering new markets, changes in your pricing structure and the additional costs required to implement these changes and keep up with growth.  Also consider additional capital needed in the current year to improve revenues or cut costs in the future.

5 Steps to Your Small Business Budget


Step 1
: Set company goals for the short term and the long term.

What are you short and long-term goals? Include revenue, profits, new products and any additional goals.  Goals should be achievable and have a solid rationale. Create action plans to support each goal and clearly outline why & how it will work.  Make sure EVERYONE involved in the budgeting process has a clear understanding of the goals. This will allow the team to thoroughly analyze the costs and revenues that fall under their responsibility and permit you to hold them accountable for performance.

Want to know how to make a small business budget plan? Step one is to start with your goals, and go from there!As you strategize your growth plan, ask:

  • What steps are required to achieve my revenue objectives?
  • How much marketing do I need?
  • Will I need more sales people?
  • How will my sales team find customers?
  • How much of my new product will I reasonably sell?
  • What will be the commission structure?
  • Do I need new, more or different equipment?
  • If I plan to be the most efficient producer in the industry in five years, what needs to be included in the budget this year to keep me on track?
  • Are there any constraints that impede the performance I am budgeting for? (This can include production capacity, internal staffing, etc.)


Step 2
: Analyze the costs associated with the goals you’ve achieved successfully in the past.

Some questions you might ask:

  • How many customers did I have and what was their average purchase?
  • Will that customer number go up or down?
  • What were the costs associated with making and selling those products?  Will anything change?
  • Will my material costs be the same or could I negotiate better prices with more volume?
  • Are any changes in my costs of labor expected?
  • Are any other costs going to change such as utilities, rent, or security?
  • How many people did I need to make my revenue goals and are they still available?

Do not simply add 10% to last year’s actual numbers.  Look carefully at each cost and analyze the effect for each change in revenue.  Identify variances from previous projected budgets or factors neglected or changed.

Examples of questions to identify where change is needed or anticipated:

  • Did the marketing department check trade show spending against the benefits gained and decide not to attend the show this year?
  • Were several jobs in the company streamlined and as a result not require as many people to grow?
  • Did team leaders review the cost of additional investments in people and add training plans?
  • Did you find the same quality raw material from another source at a lower price?


Step 3: Determine any relationships or factors that could influence your budget plan.

Analyze and be aware of the link between revenues, costs and their drivers, ensuring all related costs change with new assumptions.  Drivers of cost and revenue can influence other factors also.

Look for relationships such as:

  • An increase in the number of team members drives the square feet for office space, so will you need to rent more space?  What about equipment (computers, desks etc.)?
  • Will there be additional costs associated with acquiring a new piece of equipment, such as re-organizing the shop floor?
  • Are you expecting a significant change in how much business a customer will give you and are you prepared to staff that operation?
  • What is your capacity, and do you need adjust staffing, equipment, service, etc?
  • Did you consider travel and entertainment costs to land the new customer?

Costs can vary directly in relation revenue (these are known as variable costs). For example, to sell one additional ice cream cone you need one more cone and one more scoop of ice cream.  Other costs do not change as directly with revenue (these are known as fixed costs). The server you hired to work in your shop will be there whether you sell one more cone or 50 more cones.


Creating a small business budget plan takes a lot of dedication and planning. Here are 5 steps to help you make a small business budget that works!Step 4: Quantify and consider new costs, savings and revenue increases.

Incorporate the revenues and costs into a budget, making sure to recognize the relationship of the cost to the revenue projected.  For example, if you project an increase in revenue of 3%, make sure to adjust the costs associated with obtaining that revenue increase.


Step 5
: Look at past performance to see if any budget changes need to be made.

Compare the budgeted amounts to actual past performance and be sure the person who prepared the budget can explain every change, both in context of previous years’ performance (ex. Depreciation increased due to the acquisition of a new machine at the end of last year) and the current forecast (ex. sales commissions increased $xx because of a new commission structure and also new sales goals of $xx).  If you have agreed to any compensation tied to “beating” the budget, be aware of sandbagging. (Putting in numbers that are too easy to meet).

These steps will give you a basic budget.  Don’t forget to consider any additional cash you might need to invest in creating future growth.

Budgeting is not a once-a-year job.  Throughout the year, analyze your actual revenues and costs against budget.  Explain any differences and see if you can course correct by continuing to find better ways to do things. Your goal is to beat the budget by coming in under projected expenses and/or generating more revenue than you thought you would!

Budgeting basics are similar whether in Phoenix or your neck of the woods. If you need assistance with your budget, enlist the help of a vetted bookkeeper. Set your small business up for future success with a strong budget!