Many small- and medium-sized businesses don’t bother preparing budgets because they’re not legally or contractually required. They are content to run their company more on a daily basis.

Fair enough. Owner-operators are busy enough with their day-to-day work, so they may not have budgeting top of mind.

If you’re in this boat, I would urge you to reconsider for a couple reasons. One, a budget is like a contract that an organization makes with itself. It gives the company a set of goals to work towards and a sense of direction.

Two — and, I argue, more importantly — the process of budgeting will force you to ask questions you may not have otherwise thought to ask. Budgeting necessarily requires you to look to the future and make long-term plans, perhaps even looking beyond the time scope of the budget you’re working on. Such long-term thinking naturally brings up questions of company strategy, and even your mission, vision, and values. Are you on the right track?

Whatever numbers you land on in the budget are less important than the thinking that the process fosters. Budgeting forces you to get out of the day-to-day headspace and into more strategic thinking.