Budgets

If you are like most people you will do anything to avoid the budgeting process.  But budgets are essential to managing your business.  They will show you how things have changed from one month to the next. They help you stay focused on your goals.  They will let you know what areas of your business should be expanded and what areas you are losing your ass.  They help you plan for the regular ups and downs of your business cycle and those unexpected things like vet bills.  They are the compass of every business.

How do you know when or if you are able to afford that new trailer? You can’t just look at your bank account.  Hopefully there is money in your account.  But that doesn’t mean you have money to spend.  How do you know how much it cost to run your lesson program without a budget?

If your business is like mine, your income comes in waves.  I make a significant part of my income in the summer with summer camp.  But in December, I starve.  I need to know these fluctuations, so I can plan to cover monthly expenses during my slow months.  In August, I feel rich, and for years in August I would make those big purchased, only to have to put things on my credit card in November and December.  And it was not emergencies that would end up on the credit card.  It was things like property taxes.  Ok, I know that is crazy.  We all know property taxes have to be paid and should be easy to plan for.  But I didn’t.

So, one day, I decided to manage my business like a “normal business”.  For some reason, we horse people want to think our business is anything but normal.  I think it is just a cop-out to avoid truly working the business end of it.  How many times have you opted to ride 3 or 4 horses or clean the barn instead of reconciling you bank account?  So, what we have to do it to make the business side of your business as automatic as possible.  And the budget is the first step.

Ok, don’t shut down on me now, budgets are not that scary. And once you have them set up they will be easy to use.  Most accounting programs have a report function that will run a budget for you.  You can then download it into excel.  Excel even has a free budget spread sheet ready for your use.  Just use whatever is easiest for you.   If you hate computers get a piece of paper and a pencil. I have even put budgets on white boards, so they are easy to play with.

Nothing is written in stone so if you decide you don’t like it, you can change it later. And as you get more comfortable you can add more details.   Remember the purpose of your budget is to help you.  Not to judge you.  No one else has to see it. No one has to know what you spend on your horses shoes every month.  But you do need to be aware of just how much you are spending.  And a simple budget is better than nothing at all.

At the top of your budget list your income.  If you can break it down into cost centers.  This will help you plan for the parts of your business that you want to grow.  And then list your expenses.  Easy as that. Nothing fancy. Just get started.  If you want to start with a monthly budget you can pull it right off your bank statement and credit card statement. Monthly budgets can then be rolled into annual budgets.

Remember the purpose of any budget is to help you manage your money and your business.  It is not a waste of time.  A budget will summarize your strengths and show you the areas of your business that are dragging you down.  A simple budget will go a long way to helping you reach your goals.  And yes, your budget is not going to be exact.  It is not supposed to be.   But just going through the process will give you a better understanding or grasp of where your money is going.  And where to focus your attention. 

Here is an example budget to give you an idea. It doesn’t have to be elaborate. Most accounting systems have a report for budgeting.

If you need help getting started with your budget, managing and growing your business email me at Molly@ordinarydressagerider.com. Or click the link below to schedule an initial consultation.