WASHINGTON, May 12, 2021 /PRNewswire/ -- More than half of small businesses (54%) have a documented budget for 2021, according to a new report from Clutch, the leading B2B research and reviews firm.
Clutch surveyed small business owners and managers to learn about what kind of budgeting they do. The data reveals that most businesses do have budgets, but that the smallest businesses are more likely to go without them.
Experts say that budgets are important for small businesses' long-term planning.
"Without a budget, you have no measuring stick to evaluate your goals and performance," said Donna Conte, service area leader for accounting services at Warren Averett, a full-service accounting and advisory firm. "A budget is part of developing a business and its growth goals."
Most Small Businesses Expect to Spend More in 2021 Than 2020.
More than half of small businesses with a budget (54%) say that their 2021 budget will be larger than their 2020 budget.
Experts say that an improving business environment will fuel spending in 2021.
"It's all about positioning for the next boom," said Alina Clark, growth manager and co-founder of CocoDoc, a software development company. "A large number of businesses are planning for bigger budgets ahead of the expected post COVID-19 resurgence."
The improving economy may boost business spending, but experts warn that a budget's purpose is to make sure that increased spending is tied to specific, realistic goals that fuel profitability.
"When creating a brand new budget, you need to have some specific, realistic goals in mind," said Caitlin Worm, managing director of Blackbird Philanthropy Advisors, a philanthropy consulting firm. "These can include: 'To break even in Q3' or 'To have ten customers paying $10,000/year or more by end of the year.' The budget should tell a story of how you will run your business and what goals you want to achieve."
Budgets help small businesses spend appropriately.
Businesses With a Budget Usually Stick to Them
About one-third of small businesses with a budget (35%) exceeded their budget in 2020.
Experts say that budgets help small businesses track their spending throughout the fiscal year.
"By looking at your actual results versus your budget every 30 days, you can see how and why your business is missing the mark and make timely adjustments," said Matt Ross, COO of e-commerce websites RIZKNOWS and The Slumber Yard.
Budgets may help meet spending goals, but businesses may still break their budget.
"Small businesses break their budgets for the same reason that we all break our budgets in our personal finances: unexpected expenses, emergencies and opportunities," said Jeff Zhou, CEO of Fig Loans, a loan provider.
Having a good budgeting process can help address unexpected expenses.
Read the full report here: https://clutch.co/accounting/resources/why-small-businesses-need-budgets
For questions about the survey or comments on the finding, contact Seamus Roddy at [email protected].
The leading B2B research, ratings, and reviews firm, Clutch connects small and medium businesses with the best-fit agencies, software, or consultants they need to tackle business challenges together and with confidence. Clutch's methodology compares business service providers and software in a specific market based on verified client reviews, services offered, work quality, and market presence.