Hardwood Floors April/May 2024

Finance (Continued)

Because budgeting is such an important part of business operations, failing to prepare and regularly review your budget can result in potential risks for your business, including: • Not having an emergency fund for unanticipated expenses • An inability to expand operations or expand into new markets • Not being able to secure investment dollars to put back into your business • Not making long-term commitments to customers, vendors, or suppliers, thereby straining business relationships • An inability to make large purchases that are necessary for the business In summary, budgeting is critical to business success. It helps businesses track cash flow, plan for growth, prepare for emergencies, identify inefficiencies, and make informed business decisions. A good budget requires careful planning, goal setting, and financial analysis to maintain a business that is both operationally healthy and sustainable for the long term. Dana Rogers is the controller for the National Wood Flooring Association (NWFA) in St. Louis, Missouri. She can be reached at dana.rogers@nwfa.org.

If you work as part of a team, share the budget with the rest of the members and ask for feedback on

4

ways it could be improved. Communicating the budget and having your team members understand where and how funds are being allocated increases accountability across the business and ensures that everyone is invested in the business’s financial success. Consider looking at the budget at the end of every month. That is the time to compare it to actual numbers and see how your business performs. Make revisions as needed to maintain an accurate financial picture of your business. While there are many reasons why budgets are essential to the success of a business, one of the primary and most critical is the ability to monitor cash flow. Cash flow is what allows a business to maintain day-to-day operations. A good budget will help you track all the money going in and out of the business. Doing so will enable you to align expenses with incoming revenue and use your cash resources strategically.

Budgeting is such an important part of business operations, failing to prepare and regularly review your budget can result in potential risks for your business

38 hardwood floors hardwoodfloorsmag.com