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Most business owners do a good job budgeting for the expenses they expect. It’s the ones they don’t expect that usually cause the biggest problems.
Everyone plans for rent, payroll, inventory, and utilities. Those numbers are relatively easy to estimate. What catches people off guard are the unexpected expenses that seem to happen all at once.
A computer goes down. Your point of sale system stops working. A security camera needs to be replaced. A water leak damages equipment or inventory. A shipment is delayed. An important piece of equipment fails when you need it most. None of those expenses are exciting, but they’re part of owning a business.
That’s why I always encourage entrepreneurs to spend just as much time planning for what could go wrong as they do projecting what could go right.
When you’re putting together your financial projections, don’t just build the optimistic version. Build the realistic one. Then build the difficult one.
What happens if sales take longer than expected? What if it takes six months to reach the revenue you were hoping for? Do you have enough working capital to keep operating without making decisions out of desperation?
I’ve found that businesses with strong financial reserves make better decisions because they’re not reacting to every unexpected challenge.
The goal isn’t to expect failure. The goal is to make sure one unexpected expense doesn’t become the reason a good business struggles.
No business goes exactly according to plan. The ones that last are usually the ones that planned for that from the beginning.
Are you a business owner? I’d love to hear about your experience in the comments!
xoxo,
Cyn
