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.
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 —
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
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.