So, you own a small business. That means it’s likely that you’re operating on a relatively limited budget. When you do make money, more likely than not you are paying back loans or interest on loans that you needed to get you business started in the first place. Is that a solid budget plan for your business? If you really want your small business to succeed and grow, you need to have a practical, workable budget plan. You need to realize that without a thorough budget plan, it can be difficult to track and manage your finances. This is especially true for any unexpected business expenses that may occur. These are the biggest worries when they happen and are not planned.
Many entrepreneurs leave a secure job to run their own business. When entrepreneurs do this, they move from earning a regular income that they can budget around, to earning a more “haphazard” income. The changes can make personal budgeting difficult. The haphazard nature of business income is one of the risks of running a small business. If you want to keep your small business operating in the black, you’ll need to account for both fixed and unplanned costs, and then create a solid budget. Creating and sticking to a budget is sometimes easier said than done, but if you do it right, then you will eventually succeed. Knowing your risks and understanding them is the first part of your budgeting plans. Consider the long-term and short-term risks to accurately plan for your financial future. Just planing in the short-term is actually planning the short-term success of you business. A realistic, long-term budget is what your small business needs to keep going.
One way to mitigate risk is to build flexibility into all your service agreements, especially if you have slow seasons – because this gives you the ability to use these services on an “as-needed” basis. A business centre like Telsec is one way to get maximum flexibility for your office space needs because common areas such as a waiting area, break room and meeting rooms and reception area are included – and you can easily change the amount of space you rent. This flexibility provides options you likely can’t find anywhere else. If you talk to a successful accountant, they will tell you to overestimate your expenses, meaning to budget for more costs and less profit on any given job. When a job comes in under budget and under cost, you will feel like a hero and not like a fool. This falls into the category of “under promise and over deliver” that is often talked about in the sales side of business, so this is a successful move for your business.
Project to project budgets are great, but what about annual budgets? Do not forget that businesses go through busy and slow periods over the course of the year. If your company has an “off-season,” you’ll need to account for your expenses during that time too. Budgeting for those times when money is not coming in, is important to keeping your small business going. When you’re running a business, it’s easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance. Remember that structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing ROI (Return On Investment).
Plan for large purchases carefully and before you need them. Yes, budget ahead for the things you will need or for things that you expect will need to be replaced. Some large business expenses occur when you least expect them, such as that essential piece of equipment that you rely on every day to get the job done. Without a budget to replace or repair that machine, you might as well budget for a sign that says “Out Of Business.” When budgeting your expenditures, do not forget to budget for your time too. One the biggest mistakes small businesses make is forgetting to incorporate their time into a budget plan. When you are planning your budget, do not forget to include the time you spent on the project, or the time that you spent acquiring the job. Sales acquisition is a time that needs to be considered in the budgeting of a job. A sale does not always take a few hours; it can take days or weeks to get the contract signed.
So, you got your budget down and it seems to be working for your business, but for how long? Coming up with a good small business budget can be great, but you need to look it over from time to time. Scheduling budget reviews is just as important as reviewing you other business plans and strategies, because without your budget, you cannot have other strategies.