Wyoming Business Tips for Oct. 26

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Bruce Morse, WSBDC regional director

“When should a business owner begin preparing a budget?” Joseph, Thayne

October is National Strategic Planning Month, so it also is a great time to incorporate a budget as part of that process.

As we approach a new year, and for most businesses a new fiscal year as well, what is a budget, really? Basically, it is a forecast of your revenue, expenses and anticipated profits. This process is sometimes referred to as profit planning. It is a projection of what you believe will happen.

So, why should you take the time to do this? If you don’t, it will be difficult to answer questions like, “Can I afford to give my employees raises?”; “How much can I afford to pay myself?”; “How much should I tie up in inventory?”; and “Should we buy a new truck or limp along with the old one?”

By projecting what your revenues and expenses will be, you will be in a better position to answer these questions and others as they relate to your finances. The process will help you identify your revenues and expenses, and provide benchmarks by which to measure your progress.

These measurements can be against last year’s budget, last year’s actual results or peers within your industry. If you have employees, it is important to involve them in this process as well. After all, they will be key players in making it happen, so the more they feel invested, the better results you are likely to achieve.

A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.