It is not very difficult for a small business owner to create a budget. The difficult part is always trying to stay within that budget. Here are some tips that will help you to improve your budgeting.
Trim Expenses: You should look at ways to save money on expenses wherever possible. Only allow overtime if it is essential and if your employees have a company credit card, seriously consider getting rid of it. By cutting expenses you should be able to build a bigger money reserve in case things start to go wrong.
Create a ‘slush fund’: It is vital to leave a certain portion of your budget unallocated – this is often referred to as a ‘slush fund’. This money is for use in emergencies only and is often the saviour of many small businesses facing financial hardship. If you don’t spend the money, you can just add it to next year’s budget.
Monitor your budget: Don’t just create a budget at the start of the financial year and then forget about it. You will probably need to amend the budget every month based on your recent financial performance, as predicted figures are unlikely to be the same as the actual ones.
Monitor your income: If you manage to make more money than you expected in a particular month, try to be pro-active and adjust the budget appropriately instead of just sticking it in the bank. You may want to add extra funds to the slush fund or provide a boost to certain strained parts of the budget.
Don’t panic: If you realise that you have made a mistake and end up spending far more than you had planned in a certain month, try not worry too much about it. Budgeting is only an educated guess and mistakes are to be expected. Look closely at the upcoming months and try to find ways of making that money back.