Budgeting Tips for Your Small Business
Budget planning is part of doing business, even for small business owners. Without a budget, you will quickly find yourself in a heap of trouble, short on money and risking not being able to fulfill your financial obligations. If you want to keep your business from going too far in debt and keep it running smoothly, you need to create a budget and use these tips.
- Make a list of fixed and variable costs. Fixed costs are those expenses that do not change month to month. Variable costs can be different from one month to the next, like electricity, water, and office supplies.
- Overestimate variable costs. It is better to overestimate variable costs to avoid finding yourself short when expenses are more than you originally anticipated.
- Look for ways to cut both fixed and variable costs. Review all of your expenses and consider which ones could be reduced. For instance, instead of purchasing work uniforms, could you save money with work uniform rentals instead? TIP: Before switching suppliers/providers, give your current one the opportunity to make a counteroffer, as this sometimes could result in even more savings.
- Look for free services to reduce budgeted marketing costs. There are several free online services you can use to market your business and help reduce overall marketing expenses, such as social media sites like Facebook and YouTube.
- Revisit and update your budget on a monthly basis. Once your budget is done, it does not mean you can disregard it until next year. Budgets need to be monitored, adjusted, and reviewed every single month to ensure you are on track and do not go over.
- Make adjustments to the budget as needed. If you notice you are spending more in one category than you originally budgeted, you need to make adjustments to compensate for the added expenses. Is there a category that you are spending less in than you originally estimated? The extra money from this category could help offset the excess in the other one. If not, then you need to utilize Tip #3 above and look for ways to reduce costs.
- Monitor your sales cycles. All businesses tend to go through a “slow period” where sales drop off. You need to be able to account for expenses during this time, even though your sales may not be sufficient to cover all expenses.
- Set aside windfalls for a “rainy” day. If you land a big sales contract or experience some other significant financial gain, you may be tempted to give everyone raises or a bonus. However, make sure to set a good portion of it aside until you can review your budget and determine how to best invest the money in growing your business.
If budget planning is not your forte, it can be in your best interests to find an accountant to assist you with these tips. To learn more about renting work uniforms and facility supplies for your business, contact Prudential Overall Supply at (800) 767-5536 today!