Small business owners have to cover numerous expenses like payroll, utilities, equipment costs and advertising. Without a tight budget, it's easy to lose track of where the money goes. With that in mind, here are some tips to help get your company's budget on track.
1. Understand Your Risks
Consider both short and long-term risks, as well as the effects they may have on your business. Mandatory wage increases and changes in healthcare laws are other factors to that can impact your bottom line. Monitoring the political climate and current events can give you a better idea of what might be coming.
2. Track Your Sales Cycles
Sales tend to spike and dip in cycles. Once you get used to the ebb and flow of your business, it'll be easier to maintain the funds necessary to get you through slow times.
Pro tip: When sales are slow, create a budget centered around marketing as many products (or services) as possible.
3. Plan for Large Expenses
If you rely on important equipment or technology, create a contingency or replacement plan in the event of service disruption. Also, don't forget to plan for major upcoming tasks. You should know ahead of time about expansions, store redesigns, changes in technology and employee recruitment drives.
4. Overestimate Project Costs
Not all projects are alike. In fact, they can be as varied as your clients. For this reason, it can be difficult to predict when something will go over budget. The bigger the project is, the greater the odds that it will involve at least one unanticipated cost.
Always budget slightly above the expected cost of each item in a project. If you do this across the board, you're likely to have enough left to cover extra items that may suddenly be needed.