Interviews

Interviewed by:   Chris Kuhn, Tampa Women’s Business Examiner
Just Ask Her: Business Budgets

June 16, 10:06 AM

Going into business for yourself can be an exciting yet overwhelming process. You’d like to assume that you know all there is to know about the product or service you’re marketing but there are so many pieces to the puzzle when it comes to actually running a business. Getting a new venture off to a sound start financially is vital but even businessowners out in the marketplace for several years can take away some valuable advice from a budgeting expert as they try to weather today’s economy.  Tina Bubb, owner of Bubbs Business Basics (www.bubbsbizbasics.com) and a Tampa chapter team leader for Women in Networking Tampa Bay, offers her thoughts on some key financial challenges businesses frequently face and how to weather them and even prosper.

CKuhn (CK): Why do you think the financial side of running a business creates such headaches and confusion for business owners?

Tina Bubb (TB): Financial information is a very private matter and most people, business owners included, do not like to share this information. For that reason, new startups and very young companies often try to handle the bookkeeping duties and other financial aspects on their own. This strategy may work for number savvy individuals but not for everyone. For those who tackle the financial side of the business without the proper knowledge or training, numbers can often be a challenge. The longer they put off consulting with a professional, the more complicated it becomes. Business owners should not be embarrassed to seek professional assistance.

CK: What are a few of the most frequently asked business budgeting questions you get and what answers can you offer?

TB: The four questions I’m most often asked are: (1) why do I need a budget, (2) why should I consult a professional, (3) how do I project my sales and expenses and (4) what if my projections are wrong? First, you’re in business to make money, and a budget shows you how to do just that. It’s an extension of your business plan and quantifies it in financial terms. So a well-prepared  budget serves as a baseline and a reference tool to guide the business in the right direction. As for hiring a professional, their advice and expertise can save you wear and tear, whether it’s helping with budgets and financing or answering questions related to the business planning process. Regarding how to make projections and ensuring their accuracy, the important thing is to be conservative in your estimates for income or revenue. If it is not the first year of a business, historical data is used. If it is your first year, it’s tougher but an experienced professional can help with budgeting. Once a preliminary budget is in place, tracking actual figures becomes important to see how  these numbers align with your projections.

CK: What’s the most common mistake business owners make when it comes to the financial management of their business?

TB: The most common mistake is avoidance or procrastination. I have worked with businesses that went six or eight months without recording anything! They went by gut feeling to determine where they stood financially! Some of those businesses are not operating today as a result. A business owner who doesn’t have the time to do the accounting needs to hire a bookkeeper, an independent consultant or a CPA. One thing to remember is financial records are necessary to obtain financing and certain records are required by the IRS.  Checks and balances also are necessary to uncover bank errors or fraud in your organization. It is extremely important to get the accounting done!

CK: Take me through your process of getting a business on track to get control of the financial side of their business. What steps are taken?

TB: This process can vary greatly depending on the particular business and their specific needs. For that reason, the first step is always a free consultation to determine where they are with their finances, not how much money they have or are earning, but what are they doing in their business. Do they have a budget? Is it realistic? Are they reviewing a monthly variance report? Do they have a business plan? If the budget and business plan are in place, then we review the bookkeeping. Is it up to date? What controls are in place? Once we have all of our questions answered, we know where to begin to get them on track.

CK: What’s the secret to successful budgeting?

TB: The most important thing is setting your financial goals, your fiscal targets and the level of expenditures that are compatible with these targets. Then, understanding cash flow. It is extremely important to understand how the inflows and outflows of the business reflect the health of the company.

CK: Are there any particular tools or software you recommend business owners invest in to help them facilitate better budgeting and financial control?

TB: I recommend business owners get what they can afford and stick to their budget. You can do a budget or cash flow statement using Microsoft Excel. I use Excel to do budgets and cash flow projections for my clients. You also can do it in QuickBooks.

CK: What tips do you have for those who have already launched their companies a year or two ago and are now trying to gain greater control of their expenses?

TB: If they do not have a budget or a business plan, get them in place now. These tools help you manage the business and maintain your focus. If they have both in place and are struggling, consult a professional. Business owners often fear the expense but fees vary, so it pays to check around. A business owner needs to evaluate the service they need. If there are bookkeeping questions, look for a consultant. A QuickBooks certified Pro Advisor can assist with the QuickBooks problems or questions and will be less expensive than a CPA. If the business owner has tax questions or issues, they should call an Enrolled Agent (licensed by the IRS) or a CPA. The most important thing is not to avoid the issue .

CK: And for those business owners who may be just about to launch their first venture, your advice?

TB: The smartest thing to do is to write a business plan. It can be an important tool in dealing with relationships with banks, other lenders and investors;  uncover weaknesses in your planning processes; and aid in defining your focus.

For more info: Learn more about Chris at www.kuhnworks.com or email her at ckuhntampabay@gmail.com. Plus, you can follow Chris on Twitter @CKuhnTampaBay.

Author: Chris Kuhn

Chris Kuhn is an Examiner from Tampa Bay. Home Page.