No matter what stage your business is in, budget tips will play an important part in ensuring its success.
But when you’re trying to grow your business, having a clear understanding of your finances and being proactive about planning can make all the difference. To help you get started, we’ve put together some budgeting tips for small businesses that will help you take your company to the next level.
From making sure you have a realistic budget in place to investing in yourself and your employees, these tips will set you up for growth success.
Have a Clear Understanding of Your Business Finances
Budgeting is important for any business, but especially for small businesses and businesses in their early stages of growth. A clear understanding of your business finances is essential to making informed decisions about your business budget.
Here are some numbers to help you get an accurate budget.
1. Know Your Costs
This includes fixed costs (e.g. rent, insurance) and variable costs (e.g. materials, labor). A variable many business owners don’t consider is potential costs. For instance, recent inflation isn’t something you likely thought about a couple of years ago, but now it’s incredibly prevalent.
Of course, potential costs aren’t always negative. For example, the need to buy equipment to expand due to growth.
It’s a good idea to plan for a few different scenarios in your costs (and overall budget). Thinking about how costs will vary if things take a downturn, stay the same, or if the best possible scenario happens over the given period of time.
2. Make sure you have a cushion for unexpected expenses
Even if you try very hard to think of everything, there are still many things that come “out of the blue.”
Having cash reserves allows you to put your mind at ease and should be included in any budget. If you hit that downturn in your business, cash burn becomes an issue. Reserves allow you to keep running and get your legs back under you.
3. Prioritize your spending
Ask yourself what costs are essential to the running of your business and what’s not as vital. Not that you’ll default on your commitments. However, if you’re a service-based business and you want to keep your contractors and vendors happy — they likely take priority (as one example).
4. Keep an Eye on Your Cash Flow
Budgets and cash flow go together like….you can insert your own famous pair here. But it’s important that the accuracy of your budget and the health of your cash flow often go closely together.
5. Incorporate Your Tax Plan
Taxes are a big pull on the budget, right?
Getting proactive about your tax situation is one of the most important things you can do to protect your profits. Actively tracking certain expenses, with the credits, deductions, and tax strategies in mind allows you to keep this budget item in check.
6. Review Your Budget Regularly
Ok, so this one isn’t a monetary line item. But reviewing those line items, as your business grows, is very important. Why? Your costs will likely change.
Review your budget periodically to make sure it still makes sense for your business.
4 Budgeting Tips to Help Your Growth
Budgeting can seem daunting, but it doesn’t have to be.
Here are a few budgeting tips to help you profitably grow your business:
1. Know Your Numbers
The first step to creating a budget is to know your numbers. That means understanding your revenue and expenses. Take a close look at your past financial statements to get a clear picture of where your business stands.
2. Set Realistic Goals
Once you know your numbers, you can start setting realistic goals for your business. If you want to grow your revenue, for example, you’ll need to set a target number that you can realistically achieve.
3. Make a Plan
Once you have your goals set, it’s time to make a plan to reach them. This plan should include how much you’ll need to spend on marketing, product development, and other growth initiatives.
4. Stick to Your Plan
The most important part of budgeting for business growth is sticking to your plan. It’s easy to get caught up in the excitement of growth and start spending more than you can afford.
But if you want your business to be successful, you need to stick to your budget.
Following these budgeting tips, you can make sure that your business grows profitably
Ready to Budget for Growth?
Budgeting is an important part of any business, but it’s especially crucial when you’re trying to grow your company. By following the budgeting tips for small businesses outlined in this article, you’ll be on your way to achieving success.
At Phillips Business Group, we help small businesses protect their profits by saving as much as possible in the areas that don’t impede growth. Want to see if we’re a good fit for helping your business grow? See how we can possibly protect your profits right here.
