8 budgeting tips for small businesses

As a small business, it is so important to make sure you’re budgeting to ensure you make your business a success and make a profit. Today, we’re sharing our suggested top 8 tips to help you get started.

1 – Firstly, an obvious one, cut costs where you can.

Look at your business overall and decide what things are important and what are not. Are you getting ahead of yourself? It can be easy to be impatient and to want everything all at once, but are there some things you can cut back on for now, that maybe more beneficial in the future? For example, don’t just renew subscriptions – this could be in terms of telephone bills, Wi-Fi, marketing platforms etc – perhaps shop around and look for something cheaper.

2 – Always overestimate your costs.

It’s always better to overestimate, keeping a flexible and overestimated budget can help your small business, since you might not be able to protect yourself from unexpected expenditure that larger companies can usually absorb.

3 – Time is money.

Value your time and ensure that every second is spent wisely. Is there anything you can do regarding saving time? Perhaps there’s something that is taking up a lot of your time, whilst hiring someone else to do this for you may be costly now, in the long run, it could ultimately enable you to continue to do the things you do best, and the things that make you money.

4 – Review and revisit your budget constantly.

It’s important to always review your budget. Is it too high? Is it too low? Reflecting upon this will really help with controlling your spending habits, and ensuring you maximise the profitability of your business activities.

5 – Project Cash Flow.

Successful businesses plan for the short, medium and long-term. Accurate cash flow forecasting and reporting helps you prepare and plan for the growth of your business. When you monitor your cashflow and future profitability it allows you to make informed decisions quicker. It is important when new opportunities arrive that require capital investment you can take advantage of them. If you need to borrow having strong cashflow forecasting and reporting in place allows you to give banks and credit companies, the security they need to assess your suitability for lending.

When you know your incoming cash flow, you can fix an amount for your employee salaries and travel expenses. You can also allocate money to pay off your fixed supplier expenses. If you have surplus cash, you can then spend on business initiatives such as professional development or new equipment.

6 – Factor in seasonal and industry trends.

It’s completely normal that there will be months where your business will be thriving, and other months where sales are slow. This is normally due to seasonal inconsistency and industry trends. It is super important to plan effectively so that your business isn’t at risk of shutting down during slower periods.

When you are creating a budget, make sure to take this into consideration by gathering insights as to when your business performs better. You should aim to generate enough revenue during peak months to sustain the business during off seasons.

7 – Review your budget with your team.

As a business owner, the collective inputs from your employees may provide a more complete picture than if you were to examine things unilaterally. It’s so important to make sure you communicate budgetary/financial changes to the team, so they know what to expect, and help advise on any potential pitfalls along your journey.

8 – Take the advice of an accountant.

Accountants can really help when it comes to analysing budgets and monitoring expenditure.

We can help you build an accurate cash flow forecast, giving you total visibility of the cash situation for your business, and work with you to help you plan for the long term. This approach can be from a better understanding of your current situation, to helping you understand the implications of your future plans and providing expert guidance and advice to ensure you take the right steps forward.

If you need some guidance or advice, you can always get in touch with us here.