Budgeting for the small business
You know the saying “you have to spend money to make money“? It’s not far from the truth.
When starting a new business you have to spend a lot up front before ever making any money. Lease payment, furniture and fixtures, software costs and most of all payroll can drain a budget in the blink of an eye. Setting up a budget will help you keep track of expenditures and help you get off to a solid start.
Establishing a budget is usually the one time a year a business can focus on the year ahead rather than the current challenges it’s facing. A budget is a tool to help lead, manage and control the operations and finances of a business. Budget’s help makes goals, communicate the company’s progress with the team and can help transform and grow a business year after year.
Five Things a Budget can do for your Business:
It will communicate your goals to your team.
Tracking your revenue and expense expectations on paper helps a business know the vision for the company.
It will show you the relationship between what’s going in and what’s going out
It’s not just about seeing the numbers it’s about the relationship between the two.
It will make you more money
A budget will help you decide how much you want to make for the year so you can make a plan in order to reach those goals
You will be better able to adapt to change
Business is unpredictable. If you have a budget but lose key revenue you can see how it will affect the rest of your business so you can make the changes necessary to get back on track.
You will make decisions faster
Consulting your budget will tell you what you can and can’t do. Your budget knows the answer.
Having a realistic budget can free up time, increase productivity and prepare you for what lies ahead.
By Anne Capps Executive Vice President – American Receivable