Ah, the cash envelope system of yesteryear; if only small business budgeting was that easy.
We get it: Numbers are stressful. Especially considering these numbers can signify the make or break of your small business.
Here’s where your budget comes in. Thriving businesses plan well and stay the path.
So, small business owners, let your budget be your guide. These tips and tools will help you on your financial planning journey. After all, numbers don’t lie.
1. Let your budget work for you.
The big bad budget shouldn’t be your worst enemy. It’s about more than estimating your expenses and then matching those expenses with your revenue. It should be an actionable tool, and should work on your behalf to determine if you have sufficient funds to maintain and grow.
2. Don’t expect complete accuracy.
Your budget is an educated guess — albeit one you should follow diligently. You’ll have to make assumptions based on current trends. Much like a war plan, your budget will not completely survive contact with the “enemy”: that little ol’ thing called reality.
3. No duh: Pay attention.
In day-to-day operations, it is easy to miss how much you are paying for a given good or service. Those costs can add up dearly. Periodically review your budget and look for new services and suppliers to reduce expenditures. Many businesses die a death of a thousand cuts by not paying enough attention to their cumulative costs. A good budget is your safeguard.
4. Build in some slack in your budget.
That way you’ll have some extra money ready for necessary future expenses like expansions or new staff members. You don’t want to get caught with your money pants down.
5. View business budgeting as an ongoing project.
A monthly budget will both keep you from being surprised and help guide your thinking toward what you need to do to build your business long term. Annual budgets might be great for gigantic companies. But for smaller companies, a monthly budget is a more prudent course of action.
6. Stay on your budgeting toes.
You need an agile approach. Here’s why: Perhaps a secondary aspect of your business is performing surprisingly well. If this is the case, you’ll be able to jump on this discovery months earlier. These benefits and more come hand in hand with maintaining a monthly budget.
7. Utilize the right tool(s).
We know budgeting isn’t fun. But arm yourself with the right tools and your life will get a lot easier. These financial planning programs, some installed and some on the cloud, incorporate a suite of options like tracking sales tax, managing inventory and issuing checks. Which to choose? We have you covered. Consider these options:
- Microsoft Excel: Stop shunning the spreadsheets and roll up your sleeves. Take advantage of Excel, a business must-have, and its innumerable tutorials to track, organize and calculate.
Bonus: Cheap and/or free templates are aplenty.
- Intuit QuickBooks: More than 3 million small businesses use QuickBooks, and for good reason: It’s easy and all-encompassing, with an online version that you can access from any computer or phone.
Bonus: Tax time is simple — OK, less painful — when you can streamline all your stats with QuickBooks and TurboTax.
- PlanGuru: This business software lets users budget and forecast for up to 10 years with more than 20 standard forecasting methods. Get your glasses out and get ready to analyze tons o’ numbers.
Bonus: Import up to five years of data from Excel and QuickBooks.
- inDinero: Take a three-pronged approach to successful budgeting with inDinero. The software updates your books, files your taxes and manages payroll benefits to make your life easier, whew.
Bonus: inDinero caters to early-stage entrepreneurs, with an entire team of specialists (ranging from payroll experts to tax pros) available.
- Budget Maestro: Over complicated Excel links? Budget Maestro is a user-friendly — but very detailed — way to compare your actuals to your budget. Then, use the “what if” analysis to peek into your company’s future.
Bonus: Users rave about the parent company Centage’s customer service for any program questions or issues.