Many small business owners will admit that they prefer to spend the majority of their time working with clients and producing a quality product. Running a business with this approach can easily neglect the financial side of the equation.
Operating a business often requires owners to carefully plan and review their finances on a consistent basis. In order to be successful in a competitive market, it is essential that a business stay on budget. Preparing and actively monitoring a budget helps identify wasteful expenditures and forces the owner to be aware of spending habits.
Once a business has an established budget, it should be analyzed monthly so that owners can adapt quickly as financial situations change. A business that chooses to hire a business coach, can utilize this person’s expertise in monitoring and evaluating the budget and helping the owners set measurable goals.
Business coaches can assist in finding tools to create and manage a budget by researching and implementing the products that best fit the owner’s needs. Joey Johnson, CPA, MBA, PMP of Zeevo Group LLC, has found that Microsoft Excel is a fantastic and flexible tool to create budgets. When her business, Zeevo Group LLC, was in the planning stages, they used liveplan.com to help make sure they had revenue, expense, cash flow and headcount budgets nailed down. Business owners may also find valuable resources and tools with the SBA. (sba.gov)
When a business is facing budget challenges, a coach can look for shortfalls and offer solutions to help get back on track. Going over-budget can be attributed to both your funds and schedule. Businesses must pay close attention to how they are following the plan and budget; slight deviations are expected, but you shouldn’t be coming in significantly above or below your budget.
A business coach can work with an established budget by challenging the previous year’s budget and suggesting changes. For a new business, a coach can offer a “been there done that” perspective. They will have experience with various planning tools and will be able to provide recommendations for outside services.
Solutions to budget problems depend on the budget. According to Johnson, “hopefully you’re over budget on sales, which can mean it’s time to grow your team. But if you’re over- budget on operating expenses, then it might be time to slow down discretionary spending. Alternately, it might be time to seek a capital infusion, from the owners or outside investors. If you’re over budget on time estimates, hiring an expert (business coach) to get those tasks done more efficiently might be in order.”
There are a variety of ways a business coach can work with an owner on their budget. According to Johnson, the following techniques might be helpful for coaches to assist business owners:
A coach will discuss the tools and processes the client currently uses for budgeting at work.
Analysis. The coach will then examine any existing budgets and supporting assumptions/data (e.g, actual SG&A expenses and payroll data) and determine if you are budgeting appropriately for other taxes. A business coach can challenge the completeness of your budgets.
Understanding basic financial statements is important to managing budgets. A business coach can help the owner understand a balance sheet, income statement and cash flow statement.
It’s important to understand that business coaches and consultants have different approaches. A business coach has the ability to help an entrepreneur move from where they are to where they want to be. This level of involvement is not usually seen in consultants who tend to analyze specific areas of a business and provide the owner with only a few options. According to Johnson, a business coach “offers guidance, works as accountability partners, and has deep business experience.” Coaches work alongside business owners by asking questions, clarifying answers, and guiding them toward discovering solutions on their own.
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Many small business owners will admit that they prefer to spend the majority of their time working with clients and producing a quality prod...