Budgeting tips for small business owners

Martha Warner Author

Does your small business utilize a budget? Read on for 7 quick tips to get started.

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Photo by Patrick Tomasso on Unsplash

Do you have a budget for your small business? If you haven’t started, it’s time to think about creating and maintaining a sustainable budget for your business. Having a solid budget in place will not only help to see where you currently are, it will also help you project what your future may hold.

Budgeting can sound like a scary concept to some. However, it doesn’t need to be! Keeping track of your finances can save you a lot of trouble and worries down the road. Let’s take a look at these 7 tips to get a budget in place for your business.

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Create with attention to detail

The first step in creating a budget is to know the details around your income and expenses. Write out your expenses in detail. Write down how much the expense is and when it will be coming out of your account. Also, take note if it is a recurring expense or a one-time expense.

Don’t forget to account for the money you have coming into your business as well. This will give you a full picture as to what to expect. Do you have invoices that are recurring every month? Is there recurring income that you know you can depend on? Is your work project-by-project and you are unsure of how many clients you will sign month-to-month? Make sure to note all of these details within your budget.

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Overestimate the cost of expenses

When listing out your expenses it is always a good idea to overestimate how much something is going to cost. This practice helps you know you have the money to account for those expenses. It allows you to anticipate any unexpected expenses that may come up. If you do go over, you will be better prepared.

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Be aware of your sales cycle

Does your business have a busy and a slow season? Account for this when working on your budget. Try to plan ahead when you know your slow season is coming by having extra funds available. Also take a look at your expenses during this time. Is there a way to cut down on certain expenses or eliminate them altogether?

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Use your tools

Technology is always changing, and there often seems to be a new tool or software that will solve all of your problems. Before turning down a new software or tool, look at how they can solve your budgeting problems. There are programs available that can help you budget without the added stress of managing a spreadsheet. By using certain programs, you can simply enter expenses and record your income to keep track of your money.

One of my favorite tools is HoneyBook. Honeybook helps me to manage client communication, contracts, invoices, expense reports, and so much more! Honeybook allows me to make and receive secure payments. It also helps me set up recurring invoices, so I can get paid on time. Honeybook also provides seamless integration with tools like QuickBooks. It’s an all in one system that helps me keep track of my business earnings and expenses.

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Assess your risks

Think about the risks that could affect your business. Does your business have certain risks that you are aware of? Maybe you know of certain liabilities that could cause havoc to your business? Do you live where natural disasters could be a problem? How about the risk of a data breach?

Once you have accounted for these potential risks, take note of them in your budget. This will help prepare you for when the unexpected happens. Another great resource is my Disaster Planning and Emergency Guide. Whether natural, manmade, large or small, emergencies can have a dramatic impact on your company’s infrastructure, profitability, and ultimately, your ability to continue to run and grow your business.

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Value your time

Do you factor your time into your budget? As a small business owner, your time is worth something. You cannot forget to factor this into your budget. 

How much is your time worth? By creating a budget, you will better know how to price your services to make sure you are getting paid adequately for your services. Check out this blog post I wrote to figure out the value of your time.

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Continuously revisit your budget

Once you have created your budget, you aren’t finished. Creating a budget is a great start, but you need to continuously revisit the budget in order for it to work. Your budget will most likely not be consistent on a monthly basis. Your business and budget will evolve, and you need to adjust accordingly. A good practice is to set aside some time to revisit it on a monthly, quarterly, and yearly basis.

Following these 7 tips to creating a budget is a great starting point for your business. Creating and utilizing a budget for your business doesn’t have to be overwhelming or time consuming. There are simple steps that you can take and software you can use to save you time and money.

The team at Martha Warner, LLC does not specialize in financial advising, but we use Cutting Edge Financial Solutions. Geily is AMAZING!

Whatever steps you take to start budgeting, the most important thing you can do is start!

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Categories: Business, Other