Talking Cents

How to manage small business budget like a pro?

Budgeting is something that is happening every day unintentionally, for example, when you manage your salary to pay for bills. Small businesses face similar challenges and what can budgeting do for you? Budgeting can ease cash flow constraints, which will reduce financial stress, and allow anticipating of costs as well as avoid “surprises” more efficiently. It also allows you to know if you can afford to hire another staff or finance a new asset or technology. 

Most successful small businesses are able to budget their money and are aware of exactly where the money is spent. They constantly monitor areas where it is possible to reduce costs, what they can afford and when to pump in money into their businesses.

To be a pro in budgeting, a great start is to run the reports in your accounting system and analyses the history in terms of a monthly or annually breakdown. Compare and evaluate where you are spending too much.

Next, determine the percentage of the cost over the total costs spent. From there, assess if you can make any savings. You may consider shipping around for better material, telephone or insurance deals.

Budgeting helps you to make sure you are earning. Without a proper budget, you will not have a clear idea if you are earning or not each time you give a quote for a job. You need to know the fixed and variable costs that are going incur and charge to price so that you don’t make a loss.

Lastly, small businesses should always be familiar with the latest tax costs and incentives as it helps you to save some money.