No matter your path as a small business owner, it’s in your best interest to save money wherever and whenever you can. This all hinges on standing up a budget that works for your business. Planning for success means you need to account for both fixed and unplanned costs, and then create — and stick to — a solid budget.
Here are some tips on creating – and sticking to – a budget that works for your business:
Understand your risks
Small business owners need to consider both their long- and short-term risks to accurately plan for their financial future. Understanding these risks is important for all small businesses. Once you’ve mapped out the threats to productivity, a clearer picture can be built around emergency planning, insurance needs, etc.
Some questions to consider:
- How will policy changes, like minimum wage or health care requirements impact your workforce?
- Do you operate in a geography at high risk of a natural disaster?
- Do you rely heavily on seasonal workers?
- How might trends impact your sales?
Overestimate your time and expenses
No two projects are exactly the same, which means you can’t always predict when something is going to go over budget. When planning for a project, budget slightly above your anticipated line-item costs. No matter what. This way, if you do go over, you won’t be completely unprepared. Timing underestimation also directly increases costs. Treat your time like your money, and set external deadlines later than when you think the project will actually be done.
Know your sales cycle
Many businesses go through busy and slow periods over the course of the year. If your business has an “off-season,” you’ll need to account for your expenses during that time and plan ahead for your next sales boom. Use your downtime to ramp up marketing efforts to prevent profit generation from screeching to a halt. In order to keep your company thriving and the revenue coming in, you will have to identify how to market to your customers in new and creative ways.
Plan large purchases carefully
Planned expenses should be carefully timed and budgeted to avoid a huge financial burden on your business. Use an up-to-date budget and data-driven financial projections to fully understand the financial landscape you’re operating within. These are important components that help guide when to make large investments in your business.
Perhaps most importantly, ask for help. Here at Pathway Lending, we have a team of small business consultants who can help you with all aspects of your business. From learning how to read a profit and loss statements to projecting your cash flow, we know the ropes. Contact us if you have anything we might be able to help you with today!