Have You Ever Truly Created A Budget For Your Business?

[Sean Adams]

This is a very interesting question.

Some may be thinking to themselves - "Of course I create a budget you idiot, I am in business!"

But I am telling you right now, you would be surprised.

In the last 3 days I have spoken to approximately 30 different green industry business owners on the phone about a host of different things.

Whenever money and outlook for 2009 came up, I of course asked the very simple question - how far are you in your budgeting process for 2009?

Only 3 people actually answered me and went into detail.

I think the ultimate success of this industry as a whole is reliant on a lot of things changing and improving - professionalism certainly being at the top of the list.

But I am telling you right now, very near the top would be the need for financial education. I have been there so I am not trying to pretend like I am a saint, or a genius.

Flying by the seat of your pants is a risky way to do business. Creating and constantly looking over and ammending a budget is very empowering - almost like having a crystal ball.

I can say this - when I first created a budget for my business, it was probably a page and a half long. I figured I'd spend some money on gas and some other "stuff" and I figured people would pay me "about this much"....

As funny as it sounds, that is where many people are in this industry.

I know that the budgeting process I am working on right now is probably over 40 pages long and I have been working on it since the beginning of this quarter (October) and I am not even sure if it will be complete and accurate by January 1.

This is why many people go out of business in this industry.

So here is my question - Do you have a budgeting process? What is it like? When does it begin for the next year? Who is involved in the process? How often do you refer back to the budget?

I certainly am curious....

[americanlawn]

When I started my own company, we "used" a budget. After a few years, we got tired of crunching numbers cuz it always turned out the same. (same O same O) So now at the end of each year, we pretty much have a very good idea where we need to adjust prices. Our bottom line is PROFIT. So for the past decade, we have never put together any sort of blueprint, cuz it has become easy for us to figure out if we're making money or not. BTW stay away from firms that say they can save you money cuz they make money off you. If anybody has a guy in your office crunching numbers, he's NOT producing income (profit) My 2 cents worth :usflag:

[carcrz]

When I started my own company, we "used" a budget. After a few years, we got tired of crunching numbers cuz it always turned out the same. (same O same O) So now at the end of each year, we pretty much have a very good idea where we need to adjust prices. Our bottom line is PROFIT. So for the past decade, we have never put together any sort of blueprint, cuz it has become easy for us to figure out if we're making money or not. BTW stay away from firms that say they can save you money cuz they make money off you. If anybody has a guy in your office crunching numbers, he's NOT producing income (profit) My 2 cents worth :usflag:

Very well said. I think the only time that a budget would be necessary is if there has been financial problems, usually due to someone not knowing how to base their prices and spending more than they are making. For me, using QuickBooks has made it very easy to just click a few buttons and have any information that I may have needed. I've only done it a few times in the last few years, but I have a good idea of what I need to make and how to get there.

[greendoctor]

When I started my own company, we "used" a budget. After a few years, we got tired of crunching numbers cuz it always turned out the same. (same O same O) So now at the end of each year, we pretty much have a very good idea where we need to adjust prices. Our bottom line is PROFIT. So for the past decade, we have never put together any sort of blueprint, cuz it has become easy for us to figure out if we're making money or not. BTW stay away from firms that say they can save you money cuz they make money off you. If anybody has a guy in your office crunching numbers, he's NOT producing income (profit) My 2 cents worth :usflag:

This becomes what I call "chasing after pennies, only to lose dollars". I have seen it for myself. All the bean counters I have known in my lifetime were only good for screwing everyone else connected to them, while they walk away with all the money. I do not count beans. I make sure that every time I pull up to a property, I am making a profit and not giving something away at cost.

[lawnman_scott]

There are so many variables that a budget seems fairly useless to me. At least on paper and set in stone anyway. I have alot of it in my head, guess it dowsnt do anyone but me any good there though.

[treegal1]

this is easy, its like this....

if you are spending more than you make or you are earning less than you want to you dont have an expense problem you have an income issue, so to fix this some may say to spend less. that is not the root problem, the income is the problem. so how to fix this??? EARN MORE CASH!!!!!!!!! problem solved.

and if you dont have a budget how do you know what you can spend???and on the flip side what do you expect to earn???? do you just guess if you get to eat or not???

[Perfect Image TLM]

The last 2 years I have made what I call "Good Money". It is probably a good idea to start making a budget. To answer the question, no, other than have a good idea what my bills are and what I need to get through winter. :)

[lawnman_scott]

and if you dont have a budget how do you know what you can spend???and on the flip side what do you expect to earn???? do you just guess if you get to eat or not???
So if something happens like the price of gas almost doubles one year, then what do you do? Figure out a way to use less? Maybe only mow 1/2 the yard every week? So it isnt actually a budget, its a guideline. Anyone can figure that out in 5 min in their head.

[treegal1]

So if something happens like the price of gas almost doubles one year, then what do you do? Figure out a way to use less? Maybe only mow 1/2 the yard every week? So it isnt actually a budget, its a guideline. Anyone can figure that out in 5 min in their head.
DUDE slow your roll, I am the free fuel Queen!! HHO, bio-diesel, methane, ethanol(drink the good burn the rest), solar bike and canoe. scooters to run estimates, the works.

and fert/ fuel prices dont hurt with an upswing, its all just waste to you and gold/fuel to me....

[treegal1]

its called base operating expenses not gas money, like for someone that has a facility and a storage lot and payments and insurance, for the year. then add the rest on to it........

[PTP]

I have a budget of sorts. It is more like a financial picture of my business. I know exactly how much the average lawn will pay me and I know exactly how much my big expenses are - employees, equipment, insurance, fuel, etc. I then have a very generous misc. category that covers phone, spark plugs, oil, blades, etc. I don't itemize all those little things in the budget.

The result of all of this is that I am able to project my numbers and maximize my profit. A few minor changes here or there can result in tens of thousands of dollars difference at the end of the year.

For example, is it more efficient to run two or three man crews? What equipment will be most profitable. Sure, we all know that a big Z will mow the fastest in ideal situations but is it really the most profitable? 21" mowers are the cheapest to buy but will they generate enough revenue? Those numbers can be projected by a good budget/company financial overview.

[scottgalat]

My routes are very profitable. I spend my "thinking time" focusing more on how to make them even more so. Budget estimating is part of the process. I examine the actual income/expenses on an hour by hour basis and identify the weaknesses that are costing time/money. This allows me to target those problems and remedy them. Example: Too much drive time between two gigs? Shows me exactly where I need to pick up new customers... and where to focus my promotional efforts. Finding a new customer mid-way between the two, just cut many of my expenses (unproductive time of workers, mileage to next gig) while raising the earnings. You need to be flexible. Your best estimating may need serious retooling once the season starts. My expenses are low, and I like it that way, I don't work this hard so I can waste money.

[lawnman_scott]

its called base operating expenses not gas money, like for someone that has a facility and a storage lot and payments and insurance, for the year. then add the rest on to it........
But its just a guideline. Not really a budget.