6 Budgeting Tips for Small Businesses
As a business owner, you spend a significant amount of time analyzing and reanalyzing – and reanalyzing again. There is no aspect of your company that is more important to revisit than your finances, despite that this is a source of stress for many leaders. Budgeting doesn’t have to be overwhelming and can offer incredible insights on how to steer the direction of your business toward success. If you’re seeking to make your finances easier, follow these 6 budgeting tips for small businesses.
1. Stay organized. The first step in any successful budget is organization. Be aware of the current status of your company at all times – what are your sales numbers? Are you trending toward an increase or decrease? How much capital do you have available? How much do you have outstanding in all levels of your pipeline? Answer these questions – and more that are pertinent to your size and industry – to gain better organization of your budget.
2. Be flexible. The financial state of small businesses ebbs and flows. Don’t panic at every decline, but also don’t sit idly by. Adapt and take action. Be confident in your vision, but be willing to adjust as needed.
3. Overestimate expenses. Creating a budget calendar can be extremely helpful in knowing how much you’ll need to set aside each quarter for inventory, payroll, travel, supplies and more. When creating this outline, be sure to slightly overestimate how many expenses you’ll have. That way, you can be aptly prepared in the event additional expenses are needed – as it’s always comforting to have a safety net when it comes to your business finances.
4. Ensure your employees are content and productive. Payroll is one of the most expensive aspects of your budget – but can also be the most fruitful. Foster a workplace environment that is both encouraging and motivational, and make sure your employees are working within proper roles… properly. You pay them for a reason – ensure you aren’t spending your time watching what they are doing, as your time is your money (and so is theirs).
5. Pay taxes quarterly instead of yearly. If you fret doing your taxes once per year, it may seem more overwhelming to file them four times per year. However, this is a good way to stay aware of your financial situation – as well as to get ahead on any tax payments to the IRS and eliminate late-payment penalties.
6. Understand your business – when is your busiest time of year? Knowledge truly is power. Your budget isn’t a static plan; it can frequently change from month to month. For example, if you sell products and your busy season is November-December, you will need more inventory available during these months, as opposed to during your off season. There are certain expenses that are required all year – such as marketing, advertising, sales and general payroll. However, these may need to be ramped up or down depending on the time of year.
With the proper organization, flexibility, knowledge and expert implementations, your budget can provide you with a roadmap to a transparent financial status for your business. Transparency leads to confidence, and confidence leads to growth. Here’s to more growth in the next quarter!