Setting up a budget plan can be one of the most effective ways to grow your small business. This might seem like an overwhelming task at first, but if you follow these 10 tips, it will be easier than you think! First, create a budget plan template that includes all the information you’ll need to track expenses and growth opportunities. Next, gather all of your invoices, bills, and receipts in one place so you can get an accurate idea of how much money your business has coming in and where it’s going out every month.
1) Set Goals
1. Know what you need and want – Outline your goals for the budget and what you hope to achieve with the extra funds.
2. Find ways to cut costs – Look for areas where you can save money in order to free up more funds for growth.
3. Understand your revenue streams – Know where your money is coming from and how much you can count on each month.
4. Make a plan – Once you have all of the information, sit down and create a budget that will work for your business.
5. Be flexible – Don’t be afraid to adjust your budget as needed based on changes in your business or market conditions.
2) Get Organized with Spreadsheets
1. Open up Excel (or your preferred spreadsheet program) and create a new document.
2. Give your document a name that describes what it is, such as Budget for Expansion.
3. List out all of the potential expenses you anticipate incurring as you expand your business. Include one-time costs as well as recurring costs.
4. Research each expense item to get an idea of how much it will cost. This step is important to avoid sticker shock later on!
5. Once you have all of your expenses accounted for, it’s time to start thinking about revenue. How much do you anticipate bringing in each month? Be realistic here – if your budget relies on unrealistic revenue projections, it’s not going to be helpful.
3) Understand How Things Work
1. Know your current cash flow situation. This is the first and most important step in creating a budget. You need to know how much money is coming in and going out each month.
2. Figure out your financial goals. What do you want to achieve with your business? Do you want to grow it, or simply maintain it? Once you know your goals, you can start creating a budget that will help you achieve them.
3. Look at your past expenses. This will give you an idea of where your money has been going, and where you may be able to cut back in order to save money.
4. Make a list of all your projected expenses for the upcoming year.
4) Make it Personal
As a small business owner, you know that every penny counts. When it comes to expanding your business, you need to be extra careful with how you spend your money. Creating a budget plan is the best way to do this.
5) Set Aside Money for Unexpected Expenses
No matter how well you plan, there will always be unexpected expenses that come up when you’re running a small business. Whether it’s an unplanned repair or a last-minute order from a client, it’s important to have some money set aside to cover these unexpected costs. One of the best ways to do this is by setting up a line of credit with your bank. If you need funds and your line of credit is maxed out, your bank can give you the funds at the current interest rate (usually much lower than other loans).
6) Keep Track of Revenue and Expenses
As a small business owner, it’s important to keep track of both your revenue and expenses. This will help you make informed decisions about where to allocate your resources. For example, if your income is not enough to cover expenses, then you may need to cut back on some costs or figure out ways to bring in more revenue.
The first step in budgeting is tracking how much money comes in and how much goes out. It sounds simple but can be tricky because many people don’t have all the information they need available right away.
One way that might work for you is by recording all transactions into a spreadsheet or using an app like Mint (available on iTunes) which automatically downloads transactions from financial institutions like banks and credit cards. Mint has budgeting tools that allow you to create categories for different areas of spending such as food, transportation, clothing and entertainment-to name just a few-and assign each transaction accordingly.
7) The 50% Rule
One important rule of thumb when creating a budget is the 50% rule. This rule says that you should allocate no more than 50% of your revenue towards variable expenses. Variable expenses are those that change from month to month, such as inventory, marketing, or employee wages. The other 50% should go towards fixed expenses, like rent or insurance.
8) Don’t Forget About Taxes
No matter how small your business is, you need to budget for taxes. When you’re first starting out, it can be easy to forget about this important expense. But if you don’t plan for taxes, you could end up in financial trouble down the road.
9) Get Help When You Need It
You don’t have to go it alone when creating your budget plan. Talk to your accountant or financial advisor to get started. Find out what they charge and if they offer any payment plans. Your financial advisor can help you understand how much cash flow is needed for your business, and recommend a plan that meets those needs. Make sure it’s flexible, many of the people I work with want me to make their budget set in stone. I always explain that this is not possible because we are all human and things change constantly. The more flexible you are with your budget, the better chance you’ll be able to stay on track with it in the future. Stay focused, once you’ve created your budget, review each expense and ask yourself why this expense is necessary for the growth of your business? How much does this cost?
10) Adjust as Necessary
1. Define your goals. What do you want to achieve with your budget? Write down your specific goals and objectives so you can keep them in mind as you create your budget. 2. Do not overlook the big picture: what are the different ways your business can grow? Keep this in mind when determining how much money is needed for each area of growth, such as marketing, operations, or distribution. 3. Review previous budgets: If you have past budgets that have worked well for your company, review them to determine what parts were most successful and what adjustments need to be made for this new year’s budget. 4. Determine priorities: Assemble a list of priorities by figuring out what tasks will have the biggest impact on achieving your desired results or are the most necessary for survival of the company (depending on whether it is a start-up or an established business). 5.
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Contact UFG, Today!
United Funding Group provides funding for all types of businesses, regardless of industry. We provide merchant cash advances for many industries, including retail, service, restaurant, and real estate investment. Whether expanding your business or opening a new one, we can get you funded quickly and easily. Contact us today to learn more about merchant cash advances from United Funding Group, ufgfunding.com.
