One of the most important keys to running a successful business is to have a well planned budget that tracks spending. Make sure to consider these easily overlooked tips when creating your budget.
- Feel Free to Make Adjustments. As volatile as the market has been in recent years, it is incredibly important that your budget is flexible. Often your budget will have to be calculated and revised several times before it reaches a final version. While this process can be labor intensive, it will help you hone your budgeting skills.
- Don’t be Surprised. More often than not, you will under or over estimate certain costs in your budget. Once again it is important to be flexible about managing these surprises. One great way to adjust these costs is to move around money within the budget itself rather than redo the entire budget. For example, if your phone bill costs twenty five extra dollars than expected, use the twenty five extra dollars left over from office supplies or mail costs to cover the deficit.
- Plan for Emergencies. No matter how carefully you budget, there will be times when your business is hit with hidden fees or a period of low revenue. These times can ruin your business if you are not ready for them, so make sure to always set aside a monthly amount of cash or parts of unexpected revenue into an emergency fund. By putting away a fund in an easy to access interest-earning account, you will be better prepared for hard times should they hit your business.
- Review Your Budget Monthly. One of the best ways to avoid surprises or emergencies is to stay on top of your budget by checking and rechecking it on a monthly basis. By correcting mistakes or faulty calculations early, you can nip the potential setbacks in the bud before they blossom into a crisis for your business.
- Keep a Positive Cash Flow. If your monthly reviews show a short fall in cash flow, take out funding to stay in the black. Make sure to carefully plan out how you will pay back this borrowed funding to avoid later strife.
- Don’t be a Scrooge. While budgeting is a terrific way to use your money frugally, don’t be too rigid about spending on new opportunities. Be it attending a conference to gain new contacts or investing in an updated piece of equipment, small splurges can pay off in the long run.
- Save Before You Spend. There are plenty of ways to save, be it bundling phone and internet services or buying refurbished computers. By saving in these small ways, you can use your money in places that will better help your business, such as advertising, research and new products.
- Keep it Simple Rather than documenting every rubber band and paper clip, try to categorize expenses into broader categories. This will avoid wasting your time micromanaging, and allow you to concentrate on running your business.
- Expect to Make Mistakes. Don’t beat yourself up if you miscalculate and over or under-estimating profits because it happens. Just make adjustments to get back on track and realize that you’re only human.
- Stay on Track A budget will only work effectively if it is managed on a continual basis. Make sure not to get cocky when things go well, and don’t give up on your budget if your business hits a rough spell. A budget is the most realistic window into your company’s financial abilities and is possibly your company”s most important planning tool.
These tips should help you create a good foundation for budgeting and your business.