If you are an entrepreneur, you don’t have to be told that starting a new business requires money. And, your expenses don’t vanish once you’re up and running. This is why it’s vital to have a reliable budget to keep your expenditures from running away from you. Here are five small business budgeting tips.
1. Involve Your Employees
Subject the budgeting process to a team of employees with diverse skill sets. This will supply different perspectives on what expenses might be cut or unexpectedly occur. Also, keep your employees in the loop on your short- and long-term financial goals. This will help keep everyone working toward the same end.
2. Define Your Business Risks
Sit down and consider your short- and long-term risks and factor them into your budget. Things to take into account might include the following:
- Changes in minimum wage requirements.
- Increases in health care premiums.
- Heavy reliance on seasonal workers.
- Operating in an area at high risk for a natural disaster.
3. Overestimate Your Expenses
If your business operates on a project-to-project basis, it’s difficult to predict when a project budget will fall short. To shield yourself from such unexpected overruns, always build overestimations into your small business budget.
4. Don’t Forget that Time is Money
Small businesses budgets often don’t take time into account. Time is especially important if you have hourly-paid employees. You need to overestimate time to provide a cushion when projects take longer than expected to complete.
5. Constantly Review Your Budget
Once you’ve drawn up your budget, don’t put it in a drawer and forget about it. Regularly revise your monthly and annual budget so that you have an updated picture of your business finances.
When You Have a Cash Crunch
Even with the best budget in the world, there will almost certainly be times when you find yourself short of cash to keep your business growing. Monstera Lending understands the problems associated with small business budgeting, so contact us today to see how we can help you.