Budgets

If you’re like many small business owners, you have the best of intentions with your annual budget.

Each year, you vow that this year will be different! You’ll make a thorough budget, update it, and spend within it. But then, reality sets in. Unexpected expenses come up, revenue goes off track, and you get busy and forget to maintain your budget.

Despite the day to day realities of owning a business, it is possible to maintain a realistic budget and stick to it.

And time is of the essence! The fall is a great time to start working on your budget for the following year before the hustle and bustle of the holidays begin and then 2019 is upon us.

A budget is not a static document, but a tool that is meant to be used. Here are the reasons it’s so essential you maintain a budget:

● A budget gives you control. You can anticipate when revenue will be lower and higher, how to make staffing decisions, and when to focus your marketing efforts.

● A budget gives you flexibility. The great thing about being a small business owner is that you can change your budget whenever you need to.

● A budget keeps costs in check. You can see in black and white the impact of your spending and make adjustments as you go.

● A budget makes tax season easier. If you aren’t setting aside enough money for taxes throughout the year, April will come with a tough pill to swallow.

● A budget will give you peace of mind. It’s easy to stress out when one client or customer stops working with you or a big expense pops up. But a glance at your up-to-date budget will remind you of the bigger picture.

So now that you know why it’s so important, you might be wondering how to improve upon your budgeting practices, especially if you made a budget back in December or January and haven’t looked at it since then.

Here are four easy things to implement tips:

1. Set up a time with your accountant or trusted financial advisor to look at your budget monthly. This is one of the services we provide our clients. We use that time to update the previous month’s expenses, make sure any inventory and staffing for the month to come are covered, and see if changes are necessary. This is worth the time investment because it will make your life so much easier!
2. Set aside a larger amount of time before the end of this year for goal setting. Figure out what you want to accomplish in the year to come and then work with your accountant to determine how that will impact your expenses and income. This is the time to look into your crystal ball for potential big costs and/or risks with expenses like technology and staffing.
3. If you don’t have this already, put a line item into your budget for taxes so that when it comes time to pay estimated taxes or annual taxes, you will already have the money set aside.
4. It’s better to overestimate than underestimate spending. It’s difficult to know exactly how much you’ll need to spend, but I would rather be pleasantly surprised than caught off guard!

By putting these tips into practice, you’ll be setting yourself up for more success and less stress. If you want greater peace of mind about the financial health of your business, give us a call today . We can help you set up and maintain a budget that makes it easier to meet and exceed your business goals.

Stay tuned for next week’s blog post, with more information on how to compare the budget you project at the start of the year with your actual spending.