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Better Business Through Budgeting

Wendy Alexander, director of small business for Capital One Financial, explains why a working budget is a prerequisite for a successful endeavor

Creating a budget can help a startup entrepreneur set goals and evaluate the viability of a business idea. It can also help established small-business owners gauge the financial health of their companies, identify new investment opportunities, and measure progress. In short, no business should be without a working budget.

Yet many small companies do operate without formal budgets, or they seldom consult the budgets they draw up, says Wendy Alexander, director of small business for Capital One Financial (COF). Alexander, who provides small-business advice for the Better Business Bureau, spoke recently to Smart Answers columnist Karen E. Klein about how to develop a business budget, what to include in it, and what pitfalls to avoid. Edited excerpts of their conversation follow: