Breaking Down the Budget on the Road to Business Success

Creating and sticking to a budget lays the foundation for prosperity and gives you the freedom to turn your attention to other aspects of your business and focus on those things you actually love.While most people would agree that it’s their least favorite part of owning and managing a business, this truth is universal: budgeting is a key component to running a successful wedding company.Michelle Loretta, of the online consulting company Sage Wedding Pros, initially developed the financial coaching side of her business after recognizing patterns among wedding businesses. “Our industry is full of incredible artists and creators,” says Loretta. In contrast, “Finance is not an area that many people have learned—or care to be involved in. But—it’s so important. Numbers are the only quantifiable metric for whether a business is thriving, or merely surviving.”So how can you thrive instead of just survive? Never fear. Let’s explore some of the industry’s best tips for setting goals, monitoring progress, and steering your business’ financial health in the right direction.break Down the BudgetChoosing how you will break down your budget—where you will allocate funds and where you will choose to save—is a complex process.Becky Baker, owner and wedding planner for Becky’s Brides in Birmingham, Ala., was an accountant in a former life. When determining her company’s yearly budget, she looks to the past for guidance. “We use the same revenue we earned in the past year as a safe bet,” says Baker. “We then plug in our fixed expenses like office rent, software, payroll and taxes, and see what’s left. From there we allocate our money to things that we think will help grow our business and things that are ‘nice to have’ such as employee perks, employee t-shirts, etc.”If your company is new, and you don’t have that kind of history to rely on, you might take a different approach. One anonymous industry pro we consulted shared a sample budget breakdown that a company might use. In this example, budget items were allocated by percentages:Paco de Leon, owner of The Hell Yeah Group, financial educators and advocates based in Los Angeles, suggests that you start by knowing how much you need to earn to run your business, including your salary. “Break that number down into a number you can wrap your head around,” says de Leon. “Figure out how much you’d need to bill each month to hit that goal,” she adds.She also recommends breaking the number down into something that won’t completely overwhelm you. “Instead of freaking out about how to earn $10k/month,” she says, “maybe focus on earning $500 a day, or signing two new clients who will pay you $5,000 each. What you focus on expands and what gets measured matters. So create a goal and watch your progress.”Of course, budgets are different for every company. Travel, in the percentage breakdown above, is a higher priority to the sample company, because destination events are a regular part of the business. You will need to reflect on your own operations and decide how you can tweak yours to best suit your business structure.DIY BudgetingMany business owners, especially those who are just starting out, handle budgeting for themselves. When Michelle Johnstone Clark opened Waterlily Weddings, LLC, with offices in Ireland and the United States, she managed her own budget. “I simply used Excel to track all of my income and out goings,” says Johnstone Clark. While she now outsources some financial services, she still uses the same program to track everything. “But now, I have an accountant who checks everything quarterly and helps me plan,” she adds.To manage your own budget, you need some basic skills. Attention to detail and a good view of the big picture are important to start. Access to a solid computer program, like Excel, that can be used to track your numbers, calculate figures, and create presentations to help everyone understand your business goals, progress, and challenges is essential.So is time.If you are needed in the business, it can be difficult to work on the business, so honestly evaluate what you bring to the budgeting process, and what might be better, overall, if you outsourced the functions.Of course, the biggest advantage to DIY budgeting is saving the fees associated with hiring a pro to budget for you. However, when you handle these numbers yourself, you are also intimately familiar with one of the most important parts of your operations, which can help you make wise business decisions and steer your company in the right direction.Disadvantages include susceptibility to errors for those new to budgeting, and the huge investment in time that the process can take—which may take away from what you need to be doing to run your business.Bringing in a Budgeting ProOne of the biggest advantages to hiring professional help with your business budgeting is clarity. Loretta takes a two-fold approach when working with new financial clients. “I analyze what their business is currently doing and provide an extensive report with recommendations for improvement,” she says. “Implementation of these solutions is the foundation for moving forward in a positive direction. And, then we create a cash-flow strategy for the upcoming two years.” Loretta finds the process incredibly effective, because she firmly believes that the numbers “tell you where you need to go—all of that wandering around in the dark is done.”Outsourcing budgeting also gives you back the time you need to work on the many other aspects of running a business that you would otherwise sacrifice. The ability to set goals, monitor progress, and have enough time to spend actually attempting to achieve your goals is a powerful way to approach business management.Next StepsReady to face the numbers and learn what they reveal about your business? Begin today by writing absolutely everything down—your income, your expenses, and your goals for the next 12 months. Use these figures to help create projections and steer your business in the right direction.You won’t regret taking the time now to become fluent in your own budget, or the peace of mind you’ll develop knowing that you’re on the road to better financial understanding. WPM__Meghan Ely, OFD Consulting, Richmond, Va.