Budgeting software can help keep things straight

Budgeting for your business is probably one of the simplest things you can do–but only if you take the time to do it.

Surprisingly, many business people don’t bother to draw up a budget. Instead, it gets committed to memory as if it were the household budget. Kelly Peters, executive director for the Loveland Center for Business Development, said she runs into it all the time. “I just came back from giving a speech on ?why do businesses fail,'” she said. “And the reason for 33 percent of them is lack of cash flow understanding.”

That means having money on hand for things when you need it. “All a budget is are assumptions,´ said Sheryl Sexton, a certified public accountant in Fort Collins. “‘What can I bring in this month? What are my expenses? You can do it on a piece of paper if you want to.”

Many people simply fly by the seat of their pants, trusting their memories to recall times when payrolls or tax filings are due. The problem is that memories are faulty, and no one should be expected to keep all the details of a business in their memory files.

That’s why turning to business budgeting software makes sense.

For smaller companies that don’t have a database programmer, budgeting software is usually included as a module in another package, such as QuickBooks Pro or Peachtree or MYOB. Linda Holdredge, a CPA in Loveland, says many start-ups make do with something else. “We deal with small businesses with employees of about 30 or less,” she said. “They will do (budgeting) on Excel spreadsheets.”

One size doesn’t fit all

It is difficult to find anything close to a one-size-fits-all budgeting program because, says Sexton, all businesses are different. “They all have their own little quirks,” she said. “I came from the construction industry and they have a thing called ?retaining.’ You get a bill for something and you pay all of it except for 10 percent. Then, when the project’s done, you pay them the rest. I used something called ?Timberline.’ You could do estimates and payroll on it. Restaurants have things like tips. Everyone’s different.”

MYOB says on its Web site that it specializes in small business accounting solutions, especially for companies that may have to work in other countries. Peachtree does more or less the same thing but seems to focus more on its products.

The closest thing would be Quickbooks Pro. It’s fairly easy to understand and almost ubiquitous. Sexton said she can help someone set it up if necessary. Peters has given classes on it to business owners. The program does have a budgeting module in it. Holdredge said if there is a downside to QuickBooks, it’s that it may have too many options. “I tried everything and it was just too much,” she said. “Some of it’s unwieldy and some of the technology is inaccurate.”

Sexton doesn’t endorse or criticize Quickbooks Pro. She suggests another possible tack. “Most people who are thinking of striking out on their own are already in that line of work,” she said. “There are some associations who have financial information that might be willing to share it with you. Of course, a lot of them won’t unless you’re a member of that association. Then you have to decide if you want to spend that money.”

If all else fails, quiz your accountant about what budgeting software they might recommend. But some, like Sexton, admit they don’t often use prepackaged software in their businesses. “I’ve never worked with a budget software before,” she said.

If you are changing from a start-up into a mid-size company, Sexton advocates meeting with your accountant. Often for companies in this position, the problem is that their existing software is fine as far as it goes but it doesn’t go far enough. An accountant, said Sexton, may be able to suggest another product more suitable to your particular business needs.

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