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.
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.
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.
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.
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.
Small businesses should review their businesses more often especially if their businesses are quite volatile.
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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.
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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I appreciate these tips! It can be so hard to keep a budget, but this helps.
Welcome.
This is definitely great information for those of us who are new to entrepreneurship. Thank you for sharing!
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I’m just starting so this advise is very timely. Good thing I love spreadsheets.
Thanks Pernille for visiting.
Great advice thanks
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Very helpful post for those who are trying to setup a small business.. great read must say
Thanks for your comments.
Thanks for sharing such a useful post! Keep up the good work! :)
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Good, general tips that all can use. I am very close to purchasing a small business myself, so I need all of the guidance I can get
Hi Bryan, thanks for visiting and taking time to comment on this post.
Very good info. I needed this, Thank you very much for your business advice
Most welcomed.
Great tips. I really liked the one about reviewing your businesses plan often. That is very important for small business.
Hi Nikos, am glad that you've picked something key from the post. Thanks for visiting.
Really useful guidelines. Thanks for sharing
Welcome.