Most small businesses do not budget. They usually don’t know how and that means they don’t know how to predict their monthly cash flow. A good budget includes a Profit and Loss Statement, Balance Sheet and Cash Flow statement. The Small Business Development Center has employed me for over a year helping small business owners have a financial forecast for their business. Without a budget the owner is flying blind. Would you get on a plane with a pilot that didn’t know how much fuel he had?
The key to good budgeting is to review your assumptions and then to compare actual to budget each month. If you can predict your sales and expenses 12 months into the future then you will be very wealthy.