Budgets something everyone needs, but nobody wants to make. Budgeting can be difficult, especially when creating one for your entire small business, but they are so important to achieving financial success. We remember the struggle to create and stick to our first budget, so we wanted to share a few tips to make the budgeting process a little easier.
Don’t leave the budgeting tasks all to yourself, there are too many moving parts in a budget for you know all of the answers. Instead, assemble a team that can bring their many perspectives together to create a budget that will work across the company. Additionally, when you make updates to your budget, make sure you are proactive about communicating with employees so they can know what is expected and make the appropriate adjustments.
It can be really difficult to know exactly how much a project will cost, and if you do not add in a buffer for unexpected costs you could find yourself in a hole that is very difficult to get yourself out of. As a result, it is best to budget money for expenses so that you are not caught off guard.
Don’t underpay yourself
We know that you love your business and want to help it grow by saving every penny you can, but do not underpay yourself in order to do this. Never feel guilty about paying yourself, you too are an employee that puts in very long hours so you should be making a reasonable wage.
When planning how to spend the money you have budgeted, take some time to look for the best price. Check out multiple vendors and see if there in an opportunity to negotiate, this will take more time in the short-term, but can save you a lot of money over time.
Track your sales cycle
Many companies have busier and slower seasons during the year, so you want to make sure that your budget takes this into account. It can be easy to get caught up in times of high profit and invest a lot of your profits back into the business all at once. The safer option is to save some of the revenue from your busier season to keep things going when you slow down. It may be difficult to find the right balance in your first few years, but if you track patterns you can get it down.
Check industry standards
No two small businesses are the same, but you can still use budget information from businesses in the industry to help you start creating yours. Look online for information, talk to other businesses owners, and look around on the IRS website. All of these resources can give you somewhere to start when thinking about how revenue should be allocated. You can also find out more information about the typical sales cycle in your industry which can help you with our previous tip.
Look to cut costs
Sometimes you will find that your business needs some extra capital, perhaps you had a major unexpected purchase or are looking to boost your advertising for a specific period of time. Cutting costs in other areas of your budget can help you find room for this; take a serious look at what you may be able to cut back on temporarily and take advantage of financing programs on large purchases. These steps can help you find a bit of additional capital in the long-term.
Understand your risks
In order to have a successful budget, you should aim to have enough money to spend for any costs that come up. As a result, some of your revenue should be set aside for an unexpected emergency. For example, if there is a snow storm and you find yourself closed for a week, do you have enough to cover expenses without 7 days of revenue? Of course these kinds of emergencies won’t happen every month, but it’s still important to have money set aside so you are ready for the unexpected.
When you are first starting out, no matter how carefully you plan, your budget will likely be constantly evolving and that’s ok! Be prepared to revise your budget as the needs within your organization change, you may even want to set a monthly or quarterly calendar reminder so you have dedicated time to check-in. Diving into your budget can give you new insights into your business as a whole, helping everything to run better.
Consider consulting a professional
As a small business owner, you have a lot on your plate. If budgeting is something that feels too daunting or is something that you feel doesn’t play into your skillset well, don’t be afraid to seek the advice of a financial advisor. They can help you get a more comprehensive look into your finances, identify possible risks, problems, and solutions, and create a budget that will help you plan for the future.
Do you have your own budgeting tips for small businesses, share them with us on Twitter, @Kuviocreative.
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Originally published at www.kuv.io.