Budgeting is hard, but necessary, for everyone. If you run a business, it’s even more important that you are budgeting your business’ money and getting the most out of it. Sometimes the issue is that there’s not enough money, and sometimes the issue is that you don’t know where your money is even going. These budgeting problems, and every issue in between can be resolved with a few simple budgeting tips and tricks:
Many small businesses gain their money from jobs that are not always consistent in amount earned, or frequency of work. Because of this, it’s always a good idea to overestimate your business expenses. When figuring out your monthly outbound of cash flow for bills, materials, payroll, etc. always round up. It’s much easier to deal with fluctuation in income when it’s extra money than it is to deal with a decrease in revenue you thought you had coming in. Overestimating your monthly, and even smaller, expenses will save you a lot of stress in the long run.
Analyze Each Business Purchase
Your money is hard-earned and you don’t want to waste it on things that aren’t necessary for your business. Before spending any money on business expenses, be sure you have the money there to spend. Analyze the expense and determine whether it is crucial to your business’ growth and functioning before putting forth any money. If you determine an expense to be unnecessary to your business, you should rid yourself of that expense. Carefully analyzing any and every business purchase will greatly increase your incoming vs. outgoing cash ratio.
Update Your Budget Monthly
Any issues in your budget or revenue should be caught immediately. The only way to ensure you are not losing money or letting things slip through the cracks is by closely updating and reviewing your budget each month. Checking in on your bank accounts and monthly expenses each and every month will really go a long way in helping you to know where your money is going, if any of it is being wasted, where you can cut costs, and a better understanding of your actual business revenue.
Save, Save, Save
Okay, this one is easier said than done. However, any time you have extra money after all of your monthly expenses, it’s a great idea to set this money aside and save it. Trying to save up money for future use or unexpected expenses will be very helpful and really take a lot off your plate in the future. Saving money is hard, because there’s not always extra to do so. However, even a small amount each month will add up and help you with any unexpected or increased business expenses.
Reduce Debt Quickly
Most business owners have debt. Some have a lot, and some only have a little bit. Either way, it’s important that you try to reduce and eliminate this debt as quickly as possible. Being able to run your business on profit alone is likely not something most small business owners who are just starting out are able to do (but if you are, keep it up!). The quicker you can begin to reduce your debt and rid yourself of those pesky monthly payments, the better off you will be!
It’s important to create a monthly process for budgeting, saving, analyzing and estimating your expenses. As a business owner, you are busy, but making time for budgeting will be extremely beneficial to your business in the long run. Don’t stress about your budget at the end of the month, or any time you are running low on business cash. Instead, create positive budgeting habits that will make the whole process much smoother, more understandable, and less stressful.
For more insights on marketing strategy that actually works for small business, subscribe to the FreshLime Newsletter here. Connect with Jay Bean, Founder of FreshLime and Small Business Marketing Expert on LinkedIn and Twitter. And last of all, if any of these tips have helped you or if you have anything to add please comment below. We’d love to hear from you!