How to Balance a Small Business Budget
You must create and maintain a budget in order to ensure your small business succeeds and grows. In fact, potential investors and lenders will want to see your budget before they agree to give you money. Create a small business budget, stick to it, and most importantly, keep it balanced. If you fail to do so, you’ve set yourself up for failure before your start.
Overestimate Your Expenses
First, overestimate all expense lines in your budget because you never know when something will cost more than you anticipated it would. This is wise with your personal budget, too. Make certain you have plenty of operating capital for your expenses by padding them so you aren’t surprised each month.
You Count, Too
Account for your time in your budget as well. Don’t put yourself on the back burner just because you’re the CEO. Include your work hours alongside your staff’s hours to make certain you aren’t stuck making minimum wage at the end of the day. Account for your time and charge plenty for your services.
Run Monthly Reports
Each month you should run accounting reports to ensure your budget is working for you and you are staying within it. The worst mistake you can make is to create a small business budget and then ignore it. Check to ensure your profit margin looks good and that you or your employees aren’t overspending.
Mix it Up
If something isn’t working, adjust your budget accordingly. You must be flexible, especially with the advent of social media marketing and digital advertising. For example, an email marketing campaign may have flopped but a social media contest went through the roof. Adjust your spending accordingly.
Monitor Your Suppliers/Vendors
Make certain your suppliers and/or vendors aren’t costing you too much money. It’s wise to keep an eye on their bills and then compare their prices against each other and to other suppliers and vendors in their industry. Shop smart even for your business. You’ll reap cost-savings benefits in the end.
Finally, don’t forget who’s helping you run and build your small business. Always add an employee incentive line to your budget to reward them when they stay under their budgets and over-perform in their jobs. Small rewards and/or profit-sharing goes much farther than you might realize.
Secure your chances for success by setting up a realistic small business budget and sticking to it. Once you have it in place, monitor and revise it monthly to ensure your operating cash flow stays in the black. Don’t be afraid to ask for professional help, either, if you find the budget is your Achilles heel.