“They want to do their own thing.” These small business owners may see a budget as something that will limit their business’s growth by tying them down to a rigid structure.“You don’t really want to hold yourself accountable to anything because that’s what you’re trying to escape,” Molitor said.
When a business only has a handful of employees, it’s easier to keep an eye on everything, reducing the need for the outside accountability of a budget.
As a business grows, though, a budget provides vital direction.
In fact, these businesses may create more challenges for themselves by skipping a budget.
This is because budgeting helps small businesses focus.
“Without a budget, you have no measuring stick to evaluate your goals and performance,” Conte said.
“[A budget] is part of developing a business and its growth goals.” Overall, small business owners may be shortchanging their businesses’ potential by skipping a budget.
An essential part of budgeting is allowing some wiggle room.
“Allow for a little flexibility in your budget, because too much rigidity is impractical and will not allow for unforeseen circumstances,” said David Ambrogio, consultant for Tower Books, a small business bookkeeping and consulting firm.
“Having a budget keeps everyone working toward the same goals and helps scale your business,” said Wanda Medina, co-founder and CEO at Maventri, a full-service digital firm providing accounting, marketing, and administrative support services.
Without a budget it's difficult to determine what your challenges are and how quickly you need to fix them before running out of financial resources.