There’s no point in pretending you know what’s going to happen next year, but budget nonetheless. Articulate the future you want to create for your business.

Look ahead to avoid serious, predictable trouble, like the balloon payment on a loan or cash needed to execute a planned expansion. And as for the less predictable portion of the future? We guesstimate and then adapt based on more current information.

First I asked you to create your wish list, and then to guesstimate what your wish list will cost. Or you can skip to this one easy step: export into Excel recent month-by-month P&L data from your accounting software and put it into a format something like this (greatly simplified of course):

If you have any bona fide interest in budgeting, the rest will happen by itself. You’ll just have to start fiddling with the numbers.

A few tips borne of experience:

• Exporting real numbers means you’ve got a decent baseline to start with; it also means your budget aligns with your general ledger
• Double- and triple-check your formulas; don’t bet the farm on a CALC! error
• Add your wish list items to the budget
• Include owner’s compensation
• Don’t sweat the small stuff. Focus on the big numbers. Round numbers work wonders.
• Have all the supporting detail you want, but make all the information you need to make a decision fit on one page.

P.S. Here’s a nice little ditty on budgeting from Microsoft, actually: 8 ways to make a budget work