Business is all about money. As a business owner, you want to make as much as you can and be frugal where you have to be.
Budgeting is a vital aspect for any business, but especially important for small business owners. In this article, we’ll go over 50 budgeting tips to help your small business.
Research money and budgeting in your industry
The first thing to do is to understand the cash flow and general trends of your industry. There are tons of online articles for each industry, so spending time perusing through them as you drink your coffee. Having a better understanding of what’s new and what’s consistent will help you play your cards better and save more.
Know yourself, Know your habits
When trying to save, you have to be honest with yourself. Some of us are impulse buyers and always buy more than we think we will. Budgeting for the company starts with your personal habits. Then, you set an example for your employees and save money for the business and yourself.
Know your organization
Knowing your organization is vital to budgeting. What habits and trends do you see from those you work with? Where is the company going to be in a few years with those current savings habits? Understanding those habits and trends will help you decide what needs to be changed to budget better.
Understand your priorities
As a business owner, it’s tough to juggle everything on your plate. While you don’t have to be having budgeting meetings every day, it’s good to come back as a team every once in a while. Make budgeting a priority by bringing it up in meetings once or twice a month.
Set hard goals
Goal setting helps you track success when it comes to budgeting. How much do you want to save this quarter or this year? What plan is going to help you get to where you want to be? Once you have those questions answered, track progress and be accountable for what happens.
Keep your budget healthy
When creating your budget, sit down and make hard markers for what is considered healthy for your budget and unhealthy. For example, you could create green zones, yellow zones, orange zones, and red zones based on how much you have remaining. This takes just a few minutes when goal setting, but helps you understand how healthy your budget is overall.
Take time to review finances
Set time aside consistently (maybe once or twice a month) to review your finances and your progress to hitting budgeting goals. This can be a group meeting or just yourself as the owner. This consistent review allows you to consider what changes need to be made to hit goals.
Create a budgeting team
Creating a budgeting and finance team can be huge to your financial and budgeting success. If you already have a finance team, implement budgeting as a part of their responsibilities. If not, consider who on your team already could assist with that, or hire another employee if needed.
When setting goals and making budgeting plans, be realistic in how much you’re going to save and spend. If you aren’t honest with yourself, it’s just going to make the rest of the process more difficult. So be realistic as you prepare and pursue budgeting goals.
As you go through the goal setting and saving process, let yourself have some fun and enjoy the process and results. When you keep on saving and keep on growing, reward yourself and your team for the hard work. You don’t want to burn out, and having fun with it helps you avoid burning out.
Budgeting is a process that may need some changes as time goes on. After all, the economy changes, and the goals set may not be exactly what’s right for the company. So be prepared to shift as time goes on. When it comes to finances and budgeting, prepare diligently but implement flexibly.
When considering cutting costs, be detailed in exactly how much you’ll save in which areas. Don’t use rough estimates, but use the actual amount that you’re paying consistently. This gives you a more accurate representation of what you’re working with.
Create plans for the use of saved money
Before you’ve hit your goals and have budgeted well, consider what you’re going to do with the money you save. For example, how much are you going to put back into the business, where will you get bonuses, or what are you going to invest in? This helps you find the purpose and motivation behind the goals to propel you to hit them.
Use the right tools
There are so many tools out there to help you budget. Be resourceful and read budgeting books, articles, or consider hiring a client to manage your finances for you. There are tons of free and paid options, so consider which will be best for your business.
Discuss budgeting with others
One of the best tools you have is those around you. Discuss your plans and goals with others in your industry, or run them by mentors to get constructive criticism. These people may have great advice and information specifically for you and your company.
Budgeting and making money is a long-term game. Investments will eventually go up, and you’re not going to hit all your goals overnight. So just take a deep breath, and do what you can for today.
Shoot for discounts with good clients
Take some time and identify the clients which you have the best relationship. Once that list is made, consider if your relationship is good enough to ask them for a small discount. It doesn’t have to be much, but asking for a 10-15% discount can save your company thousands in the long run.
Track your progress
As you work towards the goals you’ve made, sit down at the end of each week and see how you’re doing. This should be a personal thing to see what contributions you’ve made and the growth that you’ve seen because of it. Take this time to appreciate the work that you’ve done.
Practice makes perfect
Odds are you’re not going to get things right on the first try. Even the CEOs of the biggest companies are still learning and still make mistakes. So as you go throughout your business and try to save, take what you learn and use it to build your business and others.
Make it a part of company culture
Implementing frugality and budgeting as part of the company’s culture builds habits for yourself and the employees. Think about your company’s core values and make sure that budgeting and frugality are a part of it.
Make it a personal habit
The goal is to make more money and save more money, right? The easiest way to do this is to make it a part of yourself. Take time to ponder how you can save money on groceries, car washes, or other miscellaneous things. As it’s a bigger part of you, more and more people will follow your example.
Remember, time is money
This is a simple thing to keep in mind, but it’s vital. As the business owner, your time is most important. Consider what things you and only you can do. The other work can be given to employees or interns. Get the most out of yourself by improving your own efficiency. This will pay you back and earn you more money in the long run.
Cut out the fluff and focus on the meat
It’s really easy to get distracted by small things when you’re a business owner; you know that. Identify what matters most and focus on that. This goes for cutting costs, as well as where you spend your time.
Ask for advice
Being humble enough to ask for corrections is going to help any business owner. We’ve previously talked about running it by friends and mentors. Take this a step further and discuss it with other small business owners close to your situation.
Tracking income is one of the first steps to budgeting well. First, understand how much you’re making each month and why. Then, think about what needs to be done to increase income and discuss that with your team.
Track fixed costs
Fixed costs are another easy thing to do when considering budgets. The nice thing is that these will never change, so you can make a game plan to combat how much you’re spending on these each month.
Understand variable costs
Variable costs are a bit more complicated than fixed costs; you know that. So look back and think about why the variable costs change so much. Is there anything that you can cut or need less of? Understanding the market will also help you understand why the prices are going up and down and how you can prepare for that fluctuation.
We all make mistakes, big and small. Those minor mistakes, though, can make a big difference in certain projects or areas. So be thorough and make sure you’re not moving the comma one spot or using the wrong numbers.
Don’t over Predict how much you’ll make
It’s easy to get excited about launching a new product because it’s a new source of income! While it’s exciting, avoid over projecting how much you’ll make. It may take time for awareness of the product to grow, so it may even be good to stay pessimistic when it comes to sales.
Research products – get the most out of your money
Taking a few extra minutes to research what you’re buying can save you tons. Are there better deals out there? Are there discounts or sales going on? Habits like these get you more out of what you pay, leaving you with more to invest elsewhere.
Pay employees to quit
Tony Hsieh, CEO of Zappos, would offer employees $ 2,000 to quit halfway through their training. His goal here was to weed out the lousy workers as fast as possible, and find the best ones. This process got him more out of who he was paying and gave the company more sales over time.
Invest in AI for your website
AI is great because once it’s installed, you reap the benefits of it for a long, long time. Implementing bots or other AI into websites or social media makes the customer experience much better. It won’t cost much but will bring in more and more sales.
Use apps or create a spreadsheet
There are so many ways to track expenses and everything relating to budgeting, but there are so many free tools that are just simple and easy. Using apps like Mint or creating a spreadsheet makes it easy to keep track long-term. You can also look back at previous data to see progress made.
Get the most out of employees and yourself
The more efficient you are, the more time you save. The more time you save, the more money you make and save. Put employees where they fit best and where they can contribute the most. Small changes can lead to big rewards.
Plan for future expenses
There may be future events or obstacles getting in the way, so businesses must prepare for them. This may be a change in the presidency, a change in the laws, or a business quarter that won’t perform as well. So make the cushion for seen and unseen obstacles.
Create an emergency fund
This is just your cushion for the unseen obstacles that may be coming in your future. Consider how much should be in it, and if it needs to be used, you’re going to thank yourself. If not, you still have that cash right there just in case the economy goes south.
Plan to increase revenue
When thinking about increasing revenue, the simplest idea that comes to mind is to work with more clients. This can be done through online marketing or even just going to networking events. The more people knowing about you and your work means more sales and revenue.
Look for beneficial change
When networking and meeting new people, ask questions about how they got through tough financial times or worked around budgeting obstacles. These are just new ideas that actually worked in the real world rather than on paper. Even if you don’t implement them, you have them in your back pocket if it could work later on.
Find ways to keep it simple
Business is easy to overcomplicate, so keep it simple. Focus on the things you know are going to work and will bring in income. Of course, there’s always room for improvement, but making simple changes decreases confusion to keep everyone on the same track.
Invest back in your business
Once you’ve saved a significant amount, consider how much you’re putting right back into your business. Your business is probably the best thing to invest in since you’re just investing in yourself. So set aside a certain percentage each quarter of earnings and how much you save to put back into the business.
Keep everyone accountable
Accountability is where you see if everyone is doing what they need to be doing. This doesn’t have to be a hard questionnaire every week, but briefly check in with employees now and then and see how things are going for them. For example, if they are struggling to implement the budgeting habits, look for ways to help and build them.
Simplify your product
If products or services are too complicated for consumers, they will not spend time learning about them. So make your marketing strategy simple enough for people to get the message quickly.
Overspending is a bad habit that businesses can get to, so draw a line to define exactly what it is. It may be a percentage or a specific dollar amount, but knowing exactly what helps you understand when you’re getting into danger.
Define Needs and wants
All businesses have needs and want, but it’s easy to jumble the two. When differentiating them, consider which products are actually going to boost sales and productivity. For example, a high-tech mouse for your laptop probably isn’t a need but a want. Set a clear line to ensure that you’re paying for what’s essential.
Personal credit can actually influence your ability to get loans in the future, even if they’re business loans. To develop good spending habits personally and for the business to develop the credit you need for success.
Budget using historical data
There’s plenty of financial data from the past years and decades for your specific industry. These trends can help you prepare for storms or even when you need to take more risks. Look at data from the industry and your company to see what changes can be made to optimize sales today and in the future.
Plan for taxes
Taxes aren’t fun for anyone, but they need to be accounted for. So when planning and setting goals, keep them in mind to give a more accurate representation.
Ask a business owner there’s going to be some risk involved. While you can’t change the risk itself, you can become more educated to make better decisions in the future. Underestimate the growth risk brings and overestimate the costs.
When interacting with clients and employees, telling more can be better than telling less. The more you share, the better picture you paint for them to understand the financial situation better. People want to help, and when you communicate a need, they may be willing to help more than you expect.
Investing may not bring you quick cash, but it’ll bring you cash nonetheless. So first, consider where you can invest your money to get a good return in a few years. Then, as you invest more and more, you’ll be able to get out more.