Beginning Balance Rule Three: Budget Is a Verb, Not a Noun
Mark and Jesse continue analyzing the problems of small business finance through the lens of You Need a Budget's "Four Rules." Today they explain that Rule Three -- roll with the punches -- is a call to actively, and continually, budget for the business.
The budget is not a static document that gets set once a month, or once a quarter, or yearly, then measured against. Budgeting that way is a good way to feel continual frustration at not meeting numbers, because all budgeting involves guessing at what you will spend. And guesses are usually wrong!
Rule Three encourages business owners to roll with the punches instead. You do this by adjusting your budget as you go, throughout the year, using the categories you've established as your guideposts. Did you overspend on travel and entertainment last month because an unexpected opportunity to pitch a product to an out of town client? That's ok! You simply move money from another category to cover the overage in travel and entertainment. It's not a budgeting failure to have overspent in that category; in fact it may be a very wise business move. In traditional historical budgeting methods, that overage would be a big red number on a spreadsheet. In YNAB, it's just called rolling with the punches.
Mark Butler CFO
You Need a Budget