7 Smart Budgeting Tips for Small Business Owners

7 Smart Budgeting Tips for Small Business Owners
January 20 07:20 2018 Print This Article

Operating a small business today is both easier than it’s ever been before and more challenging than it’s ever been before, and figuring out how to take advantage of all the tools and technology that make it so easy to operate a business in the middle of the most competitive business environment that’s ever existed is critically important if you are to succeed.

Mastering your budget is a big piece of the puzzle for smart and savvy small business owners. Included below are seven smart tips and tricks to help you hit the ground running!

Outline and fully understand your financial risks involved

The first thing you need to do is understand that all small businesses have financial risk involved, and that each individual financial risk could have a transformative impact on your business if it isn’t outlined, expected, and anticipated.

Make sure you know exactly what you’re financial risks are before you dive right in and you’ll be in a much better position than you would have been in otherwise.

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It’s always a better idea to overestimate your expenses then underestimate them

Every small business is going to incur a number of different expenses, but it’s always a good idea to overestimate how much it’s going to cost to run your business then it is to underestimate expenses and find you don’t have enough money for operations.

Do your level best to keep accurate accounting regarding your expenses, but for budgetary purposes always add 10% or more to your operating expenses to cover any unforeseen issues that might pop up.

Get a firm grip on your sales cycle

It’s critically important that you understand exactly how long it takes to make a complete and total stranger not just aware of your company, but then to move them through your sales funnel and your sales cycle to transform them into a paying customer – while also accounting for any seasonality in your sales cycle that needs to be budgeted for as well.

Make plans for large investments in your business as early as possible

It’s critical that you take a good, hard, long look at your business and identify any expensive pieces of equipment, technology, or expenses in general that you may have to cover in the short or long-term and make plans for large investments in your business as early and as ahead of those investments as humanly possible.

Bank a set percentage of all revenue you bring in

It’s always a good idea to fill up your cash reserves as much as possible, especially in the early days of bootstrapping your small business. Take a set percent of all revenue that you bring in (revenue, and not just profit) and put it in a savings account that you can use as a cash reserve moving forward.

Time really is money

You need to be sure that you have your scheduling down paths when you’re getting ready to budget, understanding that the timeline between sending out your invoices and receiving payment may be completely different than you would have thought originally. You’ll want to make sure that timing is something you really have it down pat before you dive right into your budgeting, as you need as realistic a picture of your business and your finances as possible.

Revisit and revise your budgets on a regular basis

Like everything else in modern business today, your budget is going to be a constantly moving, constantly changing, and constantly adapting plan that you’ll need to revisit and revise on the fly. Keep some flexibility in your budgeting and you’ll never have to worry about cash flow issues.

About the Author

Morris Edwards is a content writer at CompanyRegistrationinSingapore.com.sg, he writes different topics like Importance of a Business Plan for Entrepreneurs, 5 factors to consider before starting a business and all topics related to Business and entrepreneurship. If you are interested to start a company in Singapore visit our website for more information.

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