When starting your own business or working to make it grow, it is important to remember that every dollar counts. Conserving money wherever you can is a great idea whether you are working on a limited budget or working to pay back loans. At Lendified, small business is our business. Let’s look at some budgeting for small business tips to help get you started.
First things first: Why create a budget?
Your budget is going to be an estimation of your revenue minus your expenses, and what is leftover is what you can spend on growing your business. A budget is indispensable to the function and profitability of your operation. With a proper budget, you can:
- Plan for the future - With a budget in hand you will be prepared for everything that comes your way. No unexpected emergencies, no unintended consequences, no worrying about how much money is coming in. You will know how much you can spend on marketing, new employees, or renovations. A sound budget will show you how to use revenue to achieve your goals.
- Manage your cash flow - Having a budget will help you better understand your cash flow. If things don’t add up, you’ll be able to clearly see why.
- Set goals - Knowing how much you are going to have left over will let you better understand what is achievable when it comes to your business. Can you grow this year? Can you afford to upgrade in certain areas? Can you afford to take a vacation?
Understanding why you should have a budget is easy, making one is a little more difficult and requires some effort. Even if this isn’t your first attempt at making one, it can still be a bit complicated. Accurately planning for your future is lot easier if you take advantage of a few of these tips.
- Always go high - Don’t ever be afraid to overestimate how much things are going to cost you. The old adage is that it is better to be safe than sorry. In the world of business things are always going to cost more than you think, and unexpected expenses are going to happen once in a while.
Take non-business factors into account - Obviously your business is the most important thing when it comes to making your budget, but what about some other things that you can’t directly control? Will changes in legislation make you pay more for employees? Will it make your product cost more? What about insurance rates or if you are somewhere that has natural disasters? Big picture thinking is needed when building a budget.
- Allot money for upkeep - One major factor that many companies miss out on is that they need to pay for maintenance or upkeep. If you run a small-business on the web, then allocate money for upgrades, new software, or new content. Keeping your equipment or building in good shape is a great way to save money.
- Revisit quarterly - One of the hallmarks of a good budgeter is realizing that you are fallible. You might make mistakes or miscalculations initially, but you will have new data at your disposal after a few months. Things often take longer in business than they do in your personal life, so reviewing every few months works better in this case.
Running a small business isn’t easy and you won’t always have the funds to get what you need. Creating a budget is the best way to stay on track, be ready for the future, and set goals for growing your business. Lendified is here to help take your Canadian small business to the next level with an instant approval small business loan.