As a small-business owner, budgets are something you love, right? As in, you can’t wait to sit down and work one out? Not so much. For most of us, budgets are more a necessary chore than favorite fun-time activity.
So, having said that, get ready to revisit your budget. Why? Because budgets are very rarely a one-and-done deal.
Why You Should Review Your Small Business’s Budget
Let’s get the most obvious reason to review your budget out of the way: things change. Big clients come and go. Workers get raises; get their hours cut; and get overtime. Prices fluctuate. So reviewing your budget each year makes sense.
Even better, experts recommend that you tweak your budget each month. Overkill? Not really. Think about what a budget gives you:
- Cash flow control. If you don’t keep an eye on income and outgoing expenses, money has a way of spending itself. Keeping an eye on your budget not only helps you control your spending, it also helps you be realistic about needed expenses.
- Planning power. The saying goes that if you fail to plan, you plan to fail. It’s hard to run anything successfully without a roadmap of some kind. And funds are the most important ingredient to continuing in business.
- Having a plan in place can take some of the uncertainty out of the upcoming months. For example, if you know that November is usually a slow month for you, then adjust your budget accordingly – putting a bit extra aside, scheduling fewer employee hours, or making some other change to offset the potential loss.
- Financial fenesse. Lenders love to see a well-thought-out budget. Even if you're not planning on financing anything now, it does'nt hurt to stay up to date in the budget department- just in case things change in the future.
When to Revise Your Budget
Basically, there are a couple things that should prompt a budget review:
- The calendar. Whether you opt for a monthly or quarterly review, your first move should be to have a scheduled check-in with your finances. Not only will this help you monitor your dollars and cents, it will also give you an idea about where you are, goal-wise.
- Cash flow changes. Too little coming in, and you’ll understandably be looking for ways to trim the fat. But you should also think about revising your budget when your income exceeds your sales projections. If it seems to be a fortunate blip on the radar, can you funnel the profits back into your business? What about if it’s a trend? While increased sales are great, will they also mean you need to hire additional staff, buy more items, or allow for some other additional expense?
There are a number of software programs that will help you manage and revise your small-business budget. These range from the tried-and-true spreadsheet method to more specific applications – some of which are free, and many others that are available at quite a reasonable cost. Shop around, if you haven’t done so already, and find one you like. Your business will thank you.
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