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How to Create and Control Your Business Budget

January 25, 2018 by Guest Author

By Kayla Matthews

Striking out with your first startup? Been in business for a few years but still stumped by budgeting? You’re not alone. Budgeting doesn’t come naturally to many business owners, but you can develop the skills needed to create and manage your business budget.

Many scenarios require a business budget to ensure company success and direction. Matching business expenses, both anticipated and real, to revenue helps you determine if you possess enough money to put into operations, expansion and income generation, among other needs. New startups should research their market to replace a history of financial reporting while being realistic about their goals and ambitions. Businesses will use their budget to direct company growth toward income, profit and spending over the future months and years.

Without a budget plan in place, businesses risk going into debt or not spending enough of their financial resources to grow a business to compete in the market.

Starting and Maintaining Your Business Budget

Think of your company budget as a roadmap for your business. A business plan outlines directions and goals, but your budget also informs the end goals of your company. Here are five ways to create and control your business budget:

1. Make a List and Check It Twice

Base your budget off of realistic profit you desire to produce in the coming year. Don’t fret over accuracy too much because budgets focus on realistic forecasts and forward-thinking. Start with a list and build your budget from there.

Pull out your most recent business financial statements. Look at the current profit brought in since it drives other estimates for capital expenditures, expenses and costs. Consider outside factors such as the loss of a major client or a downturn in the economy in your estimates. Don’t forget your operating costs: rent, utilities, research, insurance, taxes and travel. As you would in a personal budget, create an emergency business fund or plan to seek out a loan should the need arise.

2. Don’t Be Afraid to Shop Around

Staying on top of your long-term success means continually looking for what’s best for your company and its budget. Why waste money on suppliers that deliver little but issue a hefty invoice every month? Why continue to use lead generation tools that fail to produce results?

Don’t be afraid to shop around for the tools, suppliers and services that best accommodate your company and its success. You may even consider seeking outside capital to grow your business in order to expand your resources using external finances. No matter where you invest, it’s important you get the most out of your money without wasting it.

3. Make a Budget Spreadsheet

Spreadsheets feel intimidating but remain the classic business budget tool for a reason. When opening or operating a business, use a spreadsheet to calculate estimates regarding revenue percentage and total amounts you’ll need to direct to raw materials and other resources. Do the same with your taxes, insurance and operating costs, for example.

Templates will help you plug in the right information to make conservative estimates, and you should pull out your budget spreadsheet every month for review. You’ll track business outcomes against the estimates as you move along in the following months to monitor whether your business is profitable and achieving goals.

4. Show Restraint, Not Rigidity

It’s better to go under budget than over budget in most opinions. Conduct restraint in your budget over rigidity. Going too under repeatedly sets up your business for stagnancy. Invest in new technology or other resources that will help grow your business.

When you go over budget, review areas to cut costs. Focus reduction strategies first on analyzing profit margins on services and products offered. Direct investments primarily in your most profitable services and products. You don’t need to cut positions needlessly, either. Implement a telecommute plan or reduce the workweek for applicable positions to conserve costs and keep employees. Stay on top of tracking your business expenses.

5. There’s an App for That

When it comes to managing expenses, there’s an app for that, too. Many aspects of conducting business are now automated, and budgeting is no exception.

Many budgeting apps focus on various areas of spending, from clocking hours for employees to allowing receipts to be scanned for tax purposes or reimbursement. Examples of helpful apps include LearnVest (tracking goals), DollarBird (includes past and present income) and Level Money (subtracts reoccurring expenses to show what’s left to spend). For those getting started, apps help business owners separate their personal and business lives.

Budgeting feels intimidating for many business owners. To build and maintain an effective budget, companies must see budgeting as a roadmap to future success with forecasts to weather the sunny and stormy business days.

Stay realistic, but don’t be too rigid with your budget. The ultimate goal of your budget is to keep your business running with an eye to the future for competition and growth.

About the Author: Kayla Matthews writes about communication and workplace productivity on her blog, Productivity Theory. Her work has also appeared on Talent Culture, MakeUseOf, The Muse and Fast Company.

Featured image: Photo by Fabian Blank on Unsplash

Budget Your Business Better in 2015

January 7, 2015 by Thomas

Budgeting makes the world go around, especially if you’re a business owner.

With the New Year right off and running, there’s no better time than now to get your budget on the right track.

When it comes to better budgeting for your business, here are just a few ways you can improve your financial plan for 2015:

Make and Follow a Spreadsheet

If you don’t run the numbers as the come, it could spell trouble for your budgeting endeavors. Spreadsheets are a business’s best friend, so if you haven’t already, the New Year is the perfect time to create and follow and budgeting spreadsheet.

You’ll want to make sure your spreadsheet updates are part of your daily routine, so put aside a little time each day for your budget.

If you wait until the end of the week or month to update your spreadsheet, it’ll make finding budgeting errors complicated.

Cut Costs Wherever Possible

Just because your business isn’t over budget doesn’t mean you can’t use the New Year as an opportunity to cut costs. No matter how small your budget is, there’s always room to reduce business costs.

Whether you change suppliers to reduce delivery charges or you simply use less paper in the office, every little bit counts.

If your business has unnecessary costs, chances are they’ll quickly pop up in your budget breakdown.

Assess Regularly

Having a budget is one thing, but following it is something else entirely. Assessing your budget regularly is the best way to stay on top of your business’s finances.

As the following article shows, you can keep track of your finances with a free budget template, which will take the guesswork out of the budgetary process.

Budget templates are great tools for easily tracking your daily, weekly, and monthly spending habits.

The best part is budget templates are available for all of your mobile devices, so you can check your business’s finances on the go.

Leave a Little Wiggle Room

Your business should never live above its means, which is why it’s so important to leave a little wiggle room in your budget.

You never know what’s around the corner for your business. Some extra financial cushion will ensure you don’t have budgeting issues during slow periods or when unexpected costs arise.

In terms of wiggle room, you don’t need a massive amount. A good rule of thumb is to keep 3 to 5 percent of your overall budget open each month.

If you find you don’t need that much cushion or you need to allocate those expenses elsewhere, you can adjust your wiggle room accordingly.

Set Realistic Goals

As your business bid farewell to 2014 and entered 2015, it’s important to set realistic budgetary goals.

Numbers change all the time, so keep this in mind when setting up your budget, be it for employee costs, advertising, marketing, supplies and whatever else you need to efficiently and effectively run your company.

In other words, don’t create a budget that’s so hard to follow that your business struggles just to meet its financial objectives.

If you’re ready to revamp your business’s budget for 2015, keep in mind the financial pointers above.

As a business owner, how do you stay within your budget each year?

Photo credit: Image courtesy of Stuart Miles at FreeDigitalPhotos.net

About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including finance and small business.

Accounting for the Right Business Software System

January 2, 2014 by Thomas

As a business owner, the chances are you’ll have to wear many hats.

One of them will most certainly be that of an accountant. Even if you have a dedicated accountant, you’ll still need to stay on top of the cash flow in your business.

Choosing the right accounting software can help you do just that, but how do you go about finding the right accounting software for you?

Why Does Accounting Software Matter?

Cash flow problems are one of the leading factors in business failure.

The right accounting software can help you to keep a much better handle on your cash flow, and help prevent problems later. Even basic accounting software means you can keep track of what goes in and comes out of your business, so you can see at a glance where your money is flowing.

That means you can see any areas where you are over spending, and where your strongest sources of income are, which all adds up to being able to see if your money is being spent wisely and well – a must for any business.

Software programs are available to help you with every aspect of accounting in your business, including inventory, tax reporting, budgeting, keeping track of sales, payroll capabilities, and sales forecasts.

For businesses that are able to invest a little more, industry specific software is available, with the cost usually including installation and a demonstration by a vendor.

How Do I Choose The Right Software?

To help you choose the right software, take some time to think about what you want your accounting software to do for your business. Which tasks do you need it to do?

Remember that software is a wonderful tool, but it doesn’t do the work for you – you still need to understand and input the raw information. As such, it’s important to consider which features will support you in working with the software.

It’s also important to consider the flexibility of the software – making the wrong choice now could cost you in the future, so allow for some future planning.

How would you like your business to grow? What would your software need to provide in order for it to be a good match in the future? Can the software be expanded if necessary, perhaps by upgrading to a more advanced package?

If you have an accountant or accounts department, take time to talk to them, and anyone else who will be involved in using and implementing the new system. The internet is also wealth of information and reviews; while specialist sites or software consultants can help you make a decision.

How Much Should I Invest?

Accounting software varies in price from a few hundred dollars to thousands.

In general, programs that you buy and use “as is” tend to be cheaper, as do packages with less functionality. On the other hand, more feature rich packages and industry specific packages tend to run higher.

To make the best choice for your business, take the steps suggested here to figure out what you need your software accounting to do for you. That way, you won’t end up with software that doesn’t meet your needs, or overspend on software that has features you don’t need.

Once you have your needs clear, you can search for software that meets them, and compare to find the most cost effective solution.

Good accounting software is an important investment for your business, saving you time and also paying for itself in terms of helping you control your cash flow.

Take your time, do plenty of research, and you’ll be able to invest in a tool that supports your business.

Photo credit: tedcor.com

About the Author: Tristan Anwyn is an author who writes on subjects as diverse as health, marketing, business, and SEO.

5 Tips for Trimming the Office Budget

August 21, 2013 by Thomas

Running a small business is expensive – very expensive.

Saving little bits of money here and there can make all the difference to your overall profit come year-end. There are hundreds of small ways to save money, but when it comes to saving big, there may be a few things you’re missing.

With that in mind, here are five ways to trim your office budget and start saving loads of money each year.

1. Save on utilities

Utilities are one of the largest expenses for an office. By turning up the AC just a few degrees, you can save hundreds per month. Always turn off computers and electronic equipment when not in use, switch to energy-efficient light bulbs, install light sensors in break rooms and restrooms, and consider switching to solar panels if you can afford it. Keep in mind, solar panels are very expensive upfront but will save you thousands over the years. They also can be used as a deduction on your taxes.

2. Save on marketing

Another large office expense is money spent on advertising and marketing. Keep track of where every dollar goes and take note of what methods are the most and least effective for you. For example, are you still sending customers fliers in the mail? If so, you may want to switch to sending e-fliers, instead. E-fliers are quick to make and even quicker to mail out, not to mention the amount you’ll save on paper and stamps. A great way to market your business is via social media. Build a Facebook page, Twitter account, company website and blog to attract and retain customers.

3. Save on office supplies

If you’re in need of new office supplies, which account for 20% of expenses on average, don’t just buy the first thing you see. Look for deals, ask for discounts or buy used. If you’re really looking to save money, consider leasing the larger equipment that you need. This saves you money upfront plus allows you to “test” the product before committing to it. Also, only buy equipment and supplies that you absolutely need. Too many businesses wind up wasting money on technology that never gets used.

4. Save on taxes

Small businesses can write off almost everything nowadays. When it comes time to do your taxes, be as thorough as possible to ensure you’re not missing any deductions. Some less common deductions include utilities in your home (if you have a home office), insurance premiums, retirement accounts, office equipment, bad debt (money people owe you), travel expenses and even clothing (if used for business purposes). Consider hiring an accountant if this isn’t something you wish to take on yourself.

5. Save on staffing

Each year, re-evaluate your staffing needs. Who are the top and bottom performers in your company? Are there any positions you could possibly combine into one role? Is each staff member doing their job efficiently and improving your company, or are they simply taking up space? By evaluating your staffing needs each year, and possibly firing or replacing a few employees, you’ll not only save your company tens of thousands of dollars but you’ll also have a company that’s better-run and managed.

Photo credit: scu.edu

About the Author: Sarah Brooks is a freelance writer living in Glendale, AZ. She covers topics on budget help, personal finance and small businesses.

What Are You Doing to Weather the Economic Storm Clouds?

February 20, 2013 by Thomas

Depending on which financial analyst or politician you listen to, the U.S. has either averted going off the financial cliff for now or is poised to run into even tougher financial roadblocks ahead.

So, what should small business owners be doing to position their companies for what appears to be slower economic growth for the remainder of this year?

First and foremost, do not panic.

Small business owners need to remember that the economy always goes through its ups and downs, so doing a major layoff or cutting back dramatically on oneâs advertising and marketing budgets, those kinds of moves typically do not make good financial sense.

As one who runs a small business, think about the following:

* Manpower – Whether in good financial times or not, having the right size staff in place is very important. If you find that finances are dictating you need to cut some people, look at a few options. First, how would your business be impacted if you lost some people? Would it impact the services you provide to customers? Secondly, would those remaining employees be asked to take on added responsibilities while still receiving the same salary they are now? If so, will that create some morale issues in the office? One option before cutting is talking to those you are thinking of letting go, seeing if they would stay on at a reduced salary and possibly decreased benefits or picking up more of the tab to continue receiving benefits;

* Promotions – One of the biggest gaffes small business owners make when the economy gets challenging is cutting back on their advertising, marketing, and public relations campaigns. The thinking is oftentimes that competitors are doing the same, so it is a safe time to trim this area of business. Actually, it is probably the worst time to do it, as some competitors are doing just the opposite. While there may be times you need to trim such budgets here and there, never go into a full-scale cut, because you will likely miss out on potential sales. Instead of trimming your main promotional budgets, look to do more with free promotion vehicles such as blog posts and social media;

* Future – Undoubtedly, tough economic times will pass for many who run small businesses, so it comes down to a matter of surviving the difficult stretches, allowing you to prosper when things improve. You should always be thinking growth and not contraction as you look at the big picture. What can you do to grow more with the resources you presently have? How can your company pull itself away from the pack and give customers something no one else can? Finally, how can you as a business owner safely guide your company through some stormy financial seas, knowing that there is a light at the end of the tunnel? Always be thinking about what the next step takes to grow your business;

* Past – Finally, never forget where you started from and where you are now. In order to be a successful business owner going forward, you need to learn from your past mistakes. Whether it was some bad hires or layoffs, some bad investments, or even spending too much money for products and services needed for you to run your company, never make the same mistake twice.

As a small business owner, what are you doing to make your company as economically sound as possible in 2013?

Photo credit: mozy.com

About the Author: With 23 yearsâ writing experience, Dave Thomas covers small business topics for a variety of websites, including Reputation.com.

Quality, Schedule, Budget

April 30, 2006 by Liz

Taking This Show on the Road

In an hour or so, I move my computer downtown to a hotel in Chicago while I attend a literacy convention. I know. I know. I live here. I could stay at home.

It’s a bit of a financial hit. Convention hotels in Chicago aren’t particularly inexpensive, but I see it as an investment in my customers and myself.

It’s hard enough to give my clients my undivided attention at a convention of 15,000 attendees. I want to have the flexibility to be at their exhibit booth when meetings inevitably are rescheduled. I want to be around for the after-hours events when relationships become real.

An adage in publishing, perhaps in every business, says:

Quality. Schedule. Budget. Pick Two.

What’s the right choice? Is it always the same two?

Besides it will be fun, sending you notes from the convention. Any advice you have for me while I’m there?

–ME “Liz” Strauss