6 TIPS TO A BETTER SMALL BUSINESS BUDGET

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Budgeting is important for any small business because it enables you to come up with an estimation of what is needed in terms of dollars. Estimating and matching expenses to revenue (real or anticipated) helps small business owners to determine whether they have enough money to fund operations, expand the business and generate income for themselves. Without a budget or a plan, a business runs the risk of spending more money than it is taking in or even not spending enough money towards the growth of the business. Small Business

PLANNING THE BUDGET

  • Check the industry standards

Do some homework and check your local library for information about the industry, talk to local business owners etc. This will enable you to have a rough idea of the industry, not specifics.

  • Make a Spreadsheet

You need to construct a spreadsheet to estimate what total dollar amount and percentage of your revenue will need to be allocated toward raw materials and other costs. This should be done for other expenses too like Rent, Taxes, Insurance etc.

  • Look to cut costs

Consider cost cutting, look for items that can be controlled to a large degree. You can also wait to make purchases until the start of a new billing cycle or take full advantage of payment terms offered by suppliers and any creditors.

  • Factor in Some Slack

Note that, though you may estimate that you will generate a certain rate of revenue growth, or certain expenses will be fixed/controlled this is not guaranteed to go the way you have planned. Therefore, it is important to factor in some slack and make sure you have more than enough socked away or coming in before expanding the business or taking on new employees. 

  • Review the Business Periodically

Small businesses should review their businesses more often especially if their businesses are quite volatile.

  • Shop around for services/suppliers

Shopping around for suppliers will enable you save money on other services being performed for your business. This can and should be done at various stages, including when purchasing or starting up a business, when setting annual or monthly budgets or during periodic business reviews. 

Bottom line

Budgeting remains a key process that business owners use to forecast and then match current and future revenue to expenses. This is to make sure that enough money is available to keep the business up and running, to grow the business, to compete and to ensure that you have enough funds for emergency purposes.

 
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Author: John M

John is reserved, likes taking on new challenges and blogs in free time.

35 thoughts on “6 TIPS TO A BETTER SMALL BUSINESS BUDGET”

  1. Great advice. I truly think those who is thinking of starting a small business need to read this so they get off to a good start and have the knowledge for the future.

  2. Hey John,

    Great post that’s short, sweet and straight to the point 👍
    In my experience, we all need to budget more. And these tips are practical, down to earth and will be very useful to anyone wanting to lay a solid foundation for their business.
    Thanks for taking the time to share.

    Best regards,
    Pedro

  3. To me, focusing on
    -Look to cut costs,
    – Review the Business Periodically,
    -Shop around for services/suppliers
    What matters to control the budget coz these three play an important role in reducing the budget to its minimum.

  4. My small business has an on and off season. Therefore I know that I may end up spending more money than I bring in at that time. I usually make it all back and then some. I’m going to start keeping a record of income and expenditures.

  5. This is good stuff. A lot of people avoid this aspect of their business to their detriment. It stresses me out, too. But, it is extremely necessary for a successful business. You’ve made it so simple that it takes a lot of the anxiety away by making it seem so doable. Good post.

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