Rolling budgets are an interesting option for small businesses to consider. Here are some things to note about this practice.
What Is a Rolling Budget?
A rolling budget is a continuously evolving budget that changes each month. It always includes the upcoming 12 months, no matter what month you're currently in. Say it's July. Your budget would include the time from this July to next June. Once July is over, you would drop it from your budget and add the following July onto the end of your budget.
Is it Right For You?
Rolling budgets have been especially helpful for new businesses who are just getting off the ground. When you have a limited pool of money to work with, it's helpful for you to be able to always see what's coming up in the next year. And since your finances can change rapidly, it's helpful to have to revisit the budget each month to tack on new information. It helps you to have a very current view of your businesses, plan carefully for any challenges that you will face in upcoming months, and reevaluate the trajectory of your finances on a regular basis.
It also helps you plan around anything that happens in the year. For example, if you have a great sale or your business takes a hit, you can incorporate that information quickly with a rolling budget. It may mean that you need to adjust the next several months in your budget.
A rolling budget is right for your business if you have the ability to think about the upcoming 12 months, rather than fiscal years. It takes a bit of restrategizing if you have people on your team who are used to looking at one fiscal year at a time.
How to Implement a Rolling Budget
The best thing to do is hire a small business accounting firm to help you set up your rolling budget system. They can convert the tools that you currently have (such as reports and spreadsheet calculations) so that you can use them for your new rolling budget. They can also act as support to help train staff and answer any logistical or strategic questions that come up during the transition to a rolling budget. Adjusting to this unusual style of budget may take some time, but it's a great way to make your business more adaptive in a competitive market.
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