Smart Budgeting Tips and Tricks for Small Business Owners

By admin, May 28, 2018

Creating and launching your new small business can be a very exciting moment in one’s life. On the flip side it comes with its share of stresses. One such stress that many new business owners face is caused by finances. Starting a new business often requires a lot of upfront capital. According to one serial entrepreneur, Jay Reeder, who has started all kinds of businesses from software companies to an alpaca farm, “cashflow is the most important factor to growing a healthy business.” One way to alleviate some of the stress and financial burden of starting and maintaining a small business is to have a detailed budget to follow. Continue reading to learn seven proven methods to budget for your business wisely.

Let Your Employees Get Involved

It’s understandable to believe that since you are the owner of the business that you need to do everything yourself. Delegating tasks and involving others in your team is something all great leaders do. When budgeting for your business the same principal applies. Gather all your employees up and go over the budget together as a team. Not only will it provide your employees with a sense of camaraderie and importance it will keep them up to speed with what is happening within the business. Employees need to know this information especially if it could possibly affect them. Furthermore, having a few more sets of eyes on the budget wouldn’t hurt. Someone may point out something you’ve missed or point out an item on the budget that could be eating up too much cashflow. Lastly, it is instrumental that employees are well aware of the companies short and long term financial goals and their roles in responsibilities on the path to reaching that goal.

You Still Need to Pay Yourself

As a business owner it is very easy to get too caught up in the budget. Many are so focused on saving and allocating every penny within the business that they simply forget to pay themselves. While part of this is simply forgetting it is also due to guilt. You may feel guilty paying yourself or feel as though you may be taking too much money for yourself. At the end of the day you are another employee at your company and you have to remember to set money aside for yourself.

Identify and Understand Your Risks

No matter what business venture you pursue there are risks involved. Some risks can be serious enough to financially ruin your business and they need to be mitigated. The most effective method for doing so is to identify and plan for both long and short term risks your company may face. Such risks include changes to healthcare and increased premiums and increases in minimum wage. Being in a location that frequently experiences natural disasters can also put a serious dent in your operations and finances. Knowing what risks your company may face and following a strict budget will allow your business to save money for whatever life may throw at it.

Overestimate Your Expenses

For businesses that operate on a project to project format it is detrimental that you over estimate costs for your budget. We’ve all experienced having an unexpected cost or situation arise during a project that causes the initial budgeted amount to be exceeded. By over budgeting a project or job you can protect your business from unexpected financial burden. Often times such instances can cause a business to go under before it even had a chance to develop.

Anticipate Sales Cycles

It is not uncommon for your business to experience ups and downs throughout the year in regards to sales. Depending on your type of business the majority of sales may come during one or two seasons while the remainder of the year is slow. Effectively planning for those downturns is necessary for keeping your business open. During the slow periods its important to keep costs down and to plan for the next anticipated sales spike. It would also be wise to have money set aside while your busy to ride out the slow cycles to prevent your business from falling apart financially.

Time is Money

You’ve heard that phrase all too often. In life and in business especially that saying holds very true. You need to treat time as a commodity and as if it were money. Not accounting for time and how it may affect your business financially can derail any budget. This is especially important if your employees are paid on an hourly basis. Being mindful of deadlines is equally important. Set realistic completion times to ensure that the job is completed satisfactorily and on time.

Don’t Set It and Forget It

Once you have a budget in place it is important to keep a full court press on it. Many business owners simply forget to revisit their budget after it is initially created. This is a mistake that can financially cripple your business. Just like events and happenings in life constantly change so do events and happenings in business. Its important to be flexible and agile and to constantly monitor your budget. This will ensure that you do not go into the red and out of business. Anticipating what will happen next will keep you on budget and help you adapt to the ever-changing world of business.