Are you a new or aspiring small business owner striving for success? It all starts with a smart budget.
A good small business budget helps you to keep your finances in check so you don’t end up spending more than you make. Have you assessed your budgetary needs or are you risking financial ruin?
We’re here to help you create a budget that will work for your business. Keep reading to learn all about small business budgeting.
Look At Profit and Revenue Sources
First, look at how much money that your business is bringing in (or how much you anticipate that it will bring in). What kinds of revenue sources do you have? How much money have you been bringing in every month, and is that amount increasing or decreasing over time?
You can establish some wiggle room in your budget but you should round lower if your profits are decreasing and higher if they’re increasing.
If you’re not already, make sure that you’re tracking all of your profit. You need an easy-to-analyze timeline and spreadsheet so you can assess everything.
Assess Your Costs
So how much are you spending?
Start with fixed costs. These are things that you pay every month like rent, salaries, utilities, and anything else that isn’t subject to change.
Then switch to variable costs. Are there any services that you use on and off? Do you need occasional maintenance or marketing options? What about special events?
This can also include the costs of your products if you change to meet customer demand.
You should always have part of your budget devoted to potential emergency situations. These include natural disasters, IT emergencies, data breaches, and anything else that could put you “in the hole” if you aren’t prepared.
Having an emergency fund can be the difference between losing everything and bouncing back with ease.
Add Room for Growth
You want your business to thrive, so make sure that your budget accounts for that. This means that as you do your routine analysis, you should be making adjustments as-needed.
As your business grows, your expenses will change. Your revenue will also change, though, so it balances out. Don’t become so intent on saving money that you miss the opportunity to grow.
Put This All Together
Once you have all of this information in one place, put it together and figure out where you need to cut and where you can spend more. Your expenses should be 30% or less of your revenue.
Again, as a new business owner you can have some wiggle room here, but do your best to adjust your budget to meet that goal.
Do You Have a Good Small Business Budget?
With these small business budgeting tips, you can start yourself on the path towards business success. Are you spending more than you should? What about less? It’s time to make adjustments so you can help your business thrive.
Are you looking for more helpful advice on maintaining your small business budget and finances? We’re here to offer advice to business owners so you don’t have to do any guesswork. Visit us for more.