When you have a small business, there’s a temptation to invest everything you have in order to get it going. It takes money to make money, right? Not so fast. Balancing a small business budget is crucial.
You created a budget when you started your business, but where is it now? Hidden away in some file on your computer? Budgets are easy to create, but harder to stick to long-term. Yet they are essential to your cash flow and supply chain management.
If you’ve already cast your budget aside, fear not—we can put you back on track. Here are six tips to balancing a small business budget in shape for the rest of the year.
6 Steps to Balancing a Small Business Budget
Overestimate your costs
As a business owner, you’re an optimist—otherwise why would you start your own company? But it pays to be a little more pessimistic when it comes to estimating costs. You will never account for everything in your budget, so pad your monthly line-item costs to account for any surprises that might come your way.
Don’t forget about time
Many entrepreneurs forget to account for their own time in the budget. You don’t want to start a business only to discover that you, as CEO, are making less than minimum wage.
Account for the hours you and your staffers spend on the clock. Pending your industry, that might be hours per project or per week. Make sure to revisit these estimates regularly to ensure you are charging enough for your services.
Check in monthly
Revisit your budget monthly to confirm that you’re sticking to it. Consider any anomalies—such as a busy season or a major expense. If you’re on track, pat yourself on the back. If not, examine the areas where you are overspending and either make cuts or reapportion funds accordingly.
If you do find yourself in a pinch, Fundbox advances the full value of your invoice, unlocking funds that can help you make payroll or cover an urgent equipment repair. With Fundbox, funds can be available in your bank account as soon as the next day.
Make alterations to your budget based on your successes. Perhaps you saw a big boost to your bottom line after a certain social media campaign. Try adding more to your digital advertising budget for a few months to see if you can generate even more revenue. If not, dial it back. Leaving room in your budget for experimentation is critical to the prosperity of your small business.
Periodically compare suppliers to make sure you’re getting the best deal. A certain supplier may have serviced you for years, but that doesn’t mean there’s not an up-and-comer who is eager for your business. Do your homework—either change suppliers or use the competition to drive down your current costs.
If you have employees, incentivize them to focus on costs. Your employees may go over budget to meet deadlines, so reward your staffers who stay well within their monthly budgets with small perks or profit-sharing bonuses.