Between marketing efforts, diversifying your client base and fixing leaky toilets, the day-to-day responsibilities of small business ownership can be cumbersome enough without the added pressure of making sure your top line is generating a better bottom line. There are too many in-betweens, and hoping the numbers will “just work out” is just wishful thinking.
Planning with a budget, executing the budget efficiently and regularly measuring the effectiveness of your budget are important factors for operating, expanding and generating income for your business. Here are a few tips for managing a budget.
What’s your end game? Whether you want to expand or you’re looking to increase your ROI in marketing, your budget should reflect your business goals.
Organize and monitor. This “O-M” is your new M-O. Make a spreadsheet (or spreadsheets) of your expected total expenses and expected total revenues for the next year. This will help you outline what you spend money on and how you plan to turn a profit. A year-to-year comparison chart will allow you to create real, long-term benchmarks. Contact your suppliers for estimated prices, or go by your actual costs from previous years. Remember, though, to analyze successes and failures from previous years as a guide and not as an indicator for absolutes in performances. Keep track of market trends, as well.
Simplify. While you’ll want to list essential expenses that need be covered during regular intervals, don’t break down “materials” into “paper, light bulbs, coffee,” etc., on your spreadsheets.
You are not alone. While planning, know there are resources, consultants and software aids you can use to create and track your budget.
Leave room for slack. In the wise words of Allen Saunders, “Life is what happens while you’re busy making other plans.” Err conservatively by overstating your budget and understating your expected revenues.
Software helps. There are several software programs that assist in everyday needs like creating coupons, inventory regulation, network security, sales and customer management and even understanding the legalities of your business. Popular software includes inventory and invoice assistance and account software that can help you create a financial blueprint, as well as make important financial decisions for staying on course with your budget. You can also find Microsoft® Office packages to meet your specific communication and project needs.
Get with the (payment) program. If you are a mobile vendor or sell your product or service while on the go, having a mobile credit card reader — like PayPal® or Square Reader — is essential. Having a mobile device will be necessary, as well. If it’s a tablet, you can also use your organization software to keep up with inventory, sales and other necessary operations.
Cut costs, not corners. List your essential expenses and shop around for deals to make sure you’re receiving top-of-the-line products while creating better bottom lines with your daily business operations.
Focus on your business, not your numbers. You have the spreadsheets set and you have a plan — keep that plan in mind, but don’t be too rigid with it. Don’t be afraid to go beyond your budget when opportunities to invest and grow arise, like conventions and conferences that you, your business or your employees can benefit from.
Review and Record
Keep the end game in mind. Experts recommend small business owners check their budgets every month to control finances, ensure continued commitments, enable confident decision-making, ensure funds for future projects and properly measure overall performance.
Think of loss as gain. Business growth does not just involve finances. It means you, as a business owner, and your employees are continuing to learn and create a more productive environment. Watch your cash flow (input and output), and be prepared for planned budgets to diverge from actual figures and act accordingly.
BAD is good. Budgeted – Actual = Difference. The higher the difference, the better the budgeting. If you didn’t have an end game in mind before, then there it is.
All content provided herein is for educational purposes only. It is provided “as is” and neither the author nor Office Depot, Inc. warrant the accuracy of the information provided, nor do they assume any responsibility for errors, omissions or contrary interpretation of the subject matter herein.
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