If you’re a business owner, you have a lot on your plate and utilizing the best small business budgeting tips may not be at the top of the pecking order. However, it should be! Your ability to develop a small business budget is critical to virtually everything you do. Let’s take a look at a few of the top small business budgeting tips you can use today to help improve your bottom line.
Start Out by Researching Budget Plans for Your Industry
If it’s your first time creating a budget for your small business, a great place to start is to learn standards for your industry. You can easily discover some of the most common sources of revenues and costs associated with doing business by conducting online research. You can also speak to other small business owners within your industry who may be willing to offer you insight.
Make Sure You Understand the Basic Components of Budgeting
Undoubtedly, one of the most important small business budgeting tips is to make sure your budget includes key components, such as business costs, business profits, and projected business revenues. When you’re calculating your profit margin and revenue, you should be as conservative as possible with revenue and profit margins. Your projected profits are essentially what remains when you subtract your expenses from revenues.
Overestimate Your Expenses
When it comes to key small business budgeting tips, it’s better to be over prepared. As you create your budget, you can get started by overestimating your expenses. Why? Because it’s extremely rare in business everything will go just as you planned. However, you can prepare for the unexpected by overestimating your expenses. This way, your projected budget will be able to absorb whatever mishaps or curveballs that may come your way.
Make Sure to Pay Yourself
As a business owner, you pour effort, time, and money into developing a successful business. Don't make the critical mistake of not paying yourself or underpaying yourself. In an effort to save money, many business owners are tempted to forgo taking a salary, which can spell disaster. Just as you pay your employees a fair wage, make sure to compensate yourself justly.
Always Look to Cut Costs
When times are tight and tough, you must find money somewhere to pay critical bills. And as you’re creating a budget, you can have an active awareness of where you can cut costs on variable expenses — if you need to.
For starters, you can shop around to find vendors who may offer more affordable prices! You can also look for alternatives. For instance, if your direct mail campaign is eating up a significant part of your revenue, you can consider using a more cost-effective social media campaign.
In addition to saving money, switching your advertising campaign could also garner new clients. Other effective ways to potentially cut costs are to take advantage of special payment terms offered by suppliers or to consider making larger purchases at the beginning of billing cycles.
Review and Update Your Budget Every Month
Your company’s expenses are likely to change from month to month. As a result, make sure to update your budget accordingly. It’s a best practice to meet with your accountant on a regular basis to go over your budget. You should always consider:
How well your company has performed,
How sales projections for future months can the outlook, and
Whether your budget and projections mandate additional staffing or inventory.
This monthly session can provide valuable insight on whether expenses should be reduced or adjusted accordingly.
Contact John F. Dennehy CPA Today for Small Business Budgeting Tips and Assistance
It’s vital to understand and keep in mind that you don’t have to do everything by yourself. Although you may be excellent at providing a specific service or creating a certain product, it doesn’t mean these skills translate over to creating a budget — and this is okay. Part of being a successful business owner is knowing when to ask for help.
The experts at John F. Dennehy CPA offer decades of experience helping business owners across all sectors develop budgets and improve bottom line numbers. We offer a range of services — spanning from simply offering small business budgeting tips to more comprehensive accounting solutions. In either case, John F. Dennehy CPA can help!
Contact us today.