7 Tips for Small Business Budgeting
- August 24, 2022
- By REIL Capital
Establishing a business from scratch is going to cost a lot of money at the start, and these expenses don’t disappear once you’re fully operational. Small business owners need to exert financial discipline by creating a budget that works best for them. Keep reading to find out why it’s important as well as some useful tips for a successful budgeting scheme.
The Importance of a Small Business Budget
Before we share helpful tips that’ll be essential in creating your small business budget, let’s talk about why this is important.
A business budget–regardless of the size, is an outline of your business’ finances. It showcases the important details on the current financial state of your business which include its gains and losses.
If you don’t learn how to allocate your fundings properly, then your small business is headed in a bad direction. You need to take into consideration that slow payments might occur every now and then, and being able to follow a budgeting plan alleviates you from any financial woes while waiting for the check to come through.
Now that you understand the importance of having a budget, below are small business budgeting tips that are guaranteed to help you financially.
Total All Your Revenue Sources
A small business budget is personalized and tailored on your income sources. You have to figure out exactly the amount of profit your small business brings monthly. From there, you can work your way around creating a budget that is effective.
Find Out Fixed Costs
After finding out the total income of your small business, it’s time for the uncomfortable part–laying down all your expenses. Sometimes we want to turn a blind eye to this and hope for the best, but it’s important for you to expose yourself to how much your fixed expenses are. This is to set expectations and goals that are realistic and attainable for your small business.
Consider Variable Expenses
Aside from fixed expenses, there are also variable costs which fluctuate monthly–meaning, you’re not exactly going to pay the same amount every month. This can get dangerous especially if you’re not keeping a close eye on it. At the end of each month, total the variable expenses and try to get the average of it–this way you have somewhat of an idea on how much your variable expenses typically cost in a month.
Use a Spreadsheet
Once you have every expense and income tracked, the best way to keep this organized is by using a spreadsheet. You don’t need fancy software immediately to be able to handle this. Just a simple Excel or Google Sheets document would do. If you’re familiar with their functions then you can include formulas to make inputting those numbers easier!
Here’s an easy tutorial video to help you get started on your small business budget spreadsheet.
Keep Your Employees Involved
You may be the owner of the business, but it doesn’t necessarily mean that all the pressure is placed on you! It’s important to keep everyone in your company involved so that they’re made conscious of the plan as well as add any suggestions that might be useful to the company.
Furthermore, your employees have the right to know about any adjustments that can influence them or your small business to set clear expectations moving forward.
Set Aside an Emergency Fund
While running a small business can be rewarding, let’s not forget about how complex it actually is. There are so many factors to take note of, including unforeseen expenses and rising costs. This is why every business needs to have a contingency fund to ease off any stress and worries when an unexpected situation rises up. Sure, it can be frustrating to shell out extra funds for broken equipment or an accident, but at least you already have the payment for it.
Pay Yourself Adequately
While a lot of small business owners are keen on saving every single cent of profit, this isn’t going to be a great idea in the long run. Treat yourself like any other employee, and don’t underpay yourself–don’t overpay yourself too. Having extra funding for your business is great, but don’t forget to include your salary in the budget!
Make Budgeting Easy Through REIL Capital!
We understand how difficult it is to set up a small business, and budgeting can be overwhelming, especially if you don’t have enough funds from the start. Luckily, REIL Capital offers various small business financing services. Whether you need help purchasing new equipment or need a cash advance, anything’s possible through REIL. You can even acquire a business credit card, too!
Connect with us and apply today!