Even if you own a large company, or a startup business, preparing a working business budget will be difficult. It’s a good thing if you’re interested to learn about bookkeeping and managing your finances. Budgeting is important as estimating what needs to be spent is a good predictor if the business can continue funding operations, day by day. Setting a budget also ensures that money isn’t wasted on something that isn’t necessary to keep the business running. Without managing your funds or budgeting wisely, your business is at risk of spending too much that it may even take the revenue you are expecting to gain.
Different businesses have different means of managing their finances. However, there are similarities wherein you can mimic their techniques. Businesses commonly pay rents, utility bills, payroll expenses, taxes, and even raw materials used in creating a product, or rendering a service. These are some of the factors you need to think of when setting up or taking over a business.
Here are some tips on how to plan your budget:
Do your research. Before opening a business or taking over a business, you should increase your knowledge more on the business that you’re planning to handle. Search for more info on your chosen industry, interview business owners, and check your target population. It also pays if you’d scout on earlier on the potential expenses so you can determine if you can run the business. Even if the economy’s not a good time to start a business, you can still push through with it through proper budgeting and management.
Planning and Budgeting. Before registering your business or taking over an existing one, it is better to plan ahead. Asking questions won’t hurt (and is totally free). I recommend opening a spreadsheet and managing all the logistics there. It’s a good idea to keep in touch with suppliers of your choice; you can even get a discount in return for loyalty to them. Open a tab for business expenses for operational expenses, for capital budget, and personnel budget.
Don’t underbudget. Actually, constricting yourself to a definite, strict budget isn’t ideal. Cut some slack. Adjust your budget and put in some extra money so it can adjust if ever an estimate goes wrong. Estimates are just estimates; it is not a definite cost. Soon, it will increase or decrease depending on how often it is used, how it is affected by various factors, and more.
Cost cutting. Running a business has its own ups and downs. If you’re in a rut, look for expenses you can sacrifice first, then allocate the budget into more important factors. If there’s something you can sacrifice in order to increase a budget for another factor, then it’s better to do away with it first until such time that you can afford to allocate funds for it. It’s also good to look for discount opportunities if you cannot sacrifice budgeting for some expenses.
Budget Review. Whether you’re managing a large firm or a small business, make sure you continuously monitor or review your budget. You can budget monthly or every two months, but I suggest you monitor your budget plan frequently. Businesses can be quite volatile and there can be unexpected expenses along the way. If you think there are better and more affordable suppliers, then go with them. It’s an opportunity to save money and decrease the chances of your revenue to be spent for expenses.
Budgeting is an easy and essential process for your business. With the proper mindset and discipline, your business will be looking forward to a bright tomorrow.
