Owning your own business can be very appealing. You have the potential to make extra money, work flexible hours, and generally, really enjoy what you do each day. But there’s one thing that can hold you back – budgeting. Making a budget on your own, without help from a professional team of accountants, is no easy task.
Starting a small business as an entrepreneur is exciting and a big commitment. Small business owners often make the mistake of underestimating their startup costs. Researching your product and market is just one part of becoming an entrepreneur.
When you do your business budgeting smartly, you can make more money without cutting corners and without breaking your back. The more confident you are about your budgeting, the less stress you’ll feel about it—and the better off your business will be.
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Have a separate business and personal finance
Money has become crucial to the success of businesses because it is an important factor in the growth and development of business. However, when it comes to money, one of the basic things for your business budgeting is to have separate business and personal finance for tax saving and easy bookkeeping.
All the owners of businesses need to have financial planning like managing personal and business finances. If it will not be planned well, there will be some errors in your books that you made such as you can’t identify the expenses of your business or personal expenses. You also can’t identify what you spent every month, which is affecting your budgeting.
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Business plan for budgeting
Whether you are an established business looking to grow or a start-up looking to get your feet off the ground, a business plan helps you to develop your business on the right track. A quality business plan will help a business budget better, manage finance in a better way, and also helps in getting funding from outside sources.
Small business operators have startup costs. Make sure to calculate your business startup costs for the right business budgeting. This will take your business a long way. The more expenses you have as a small business, the more likely it is that your financial forecasts are too optimistic about revenues and cash flows.
Related Article: How to calculate startup costs for small business
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Hold all your receipts
The second point on the line for your business budgeting is to hold all your receipts. The reason for this is it can help keep track of your spending. If you would like to find out how much money you spent or should have spent on vacation, Crafts, entertainment, etc. You can use the receipt to help keep track of it and make a document of how much you spent.
It’s easy to lose these small slips of paper, especially if they’re under other receipts. If you organize them as soon as you get home from running errands, they are less likely to get lost in a pile of bills.
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Set aside currency for taxes
Even though this is the obvious step, as a small business startup most entrepreneurs fail to follow this.
For the safer side of your business, make sure to hold a separate bank account and put aside 35% of your net revenue or 20% of your gross revenue every month. If you fail to plan for it, then you might end up spending much more on late fees, which may even result in the risk of an audit.
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Rotate your eyeball and shop around
As hard as you work to make a profit, you shouldn’t give away the store when you negotiate your business deals. The truth is, whole industries have been designed to snare small-business owners and make them overpay. Don’t settle for the first deal once you find a supplier. And make sure not to overpay for products.
If you see a deal, take the time to do the math and see if it’s worthwhile. You might be surprised that another one is waiting for you right around the corner to give you a better return.
Even though this point looks simple, most entrepreneurs in practice fail to follow it. The main reason might be tired of searching and hesitant to bargain. Hope you’re not one among other small business entrepreneurs.
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Have a good relationship with the supplier
Why have a good relationship with the supplier? How does it help in business budgeting? These may be the questions that arise in your mind. When you have a good relationship with the vendor or supplier, you can bargain a step ahead.
Your supplier can supply the product requirements as soon as possible so that your customers can get their products whenever they are in need. When you find a supplier within a reasonable distance from your shop, you can order inventories with a reasonable count, which will not lead to inventory wastage such as expiring.
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Pick Freelancers, Employees Instead
This tip is a great idea that workout for most businesses, to keep their business within budget. When you hire an employee, you need to pay for them on monthly basis. As you are a small business owner, there might be work for some times and no work for more times for employees.
So, picking the right freelancer for your business task can help you to save your money. When your business grows and when you feel that you need an employee to work daily, hire them. That will be the right time to hire an employee for your business.
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Budget for hiring an employee
As a small business hiring an employee is not an easy task. You need to pay for an employee from your profit as an investment.
Small businesses often have tight budgets and are concerned about the upfront costs of hiring a new employee. A new hire isn’t only a financial investment, also it should be your investment in your business that can increase profits and make a positive impact on your bottom line.
While hiring an employee, think about their training materials, potential payroll fees, additional equipment, and more. Plan your budgeting accordingly.
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Purchase used one
As a small business owner and an entrepreneur, try to purchase used products. This might look silly. But it saves your investment on actual. When you buy used furniture for your company, you save 50% of your business furniture investment. There are lots of furniture available second-hand with a good look and quality.
As a startup business, this is a cool idea. Once your business grows with a reasonable product you can exchange them. Not only furniture but also your office equipment. Skip the equipment that is low prioritized.
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Work at your home
Try to plan your business from home until you need a brick-and-mortar location. Not every business needs a brick-and-mortar location. It will help you to save thousands of dollars of cash for rent on office, transportation, fu=rniture, electricity, and more.
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Use Budgeting Software
As a small business owner, to keep your business organized and within budget, try using small business budgeting software. If you feel hard to pay for budgeting software, make research. There is Free and Low-cost business budgeting software that helps your business more.
If you feel hard to afford budgeting software, try using a spreadsheet. There are lots of free templates for budgeting. Make use of it. By following spreadsheets you can make a detailed list of all expenditures and income expenses. Many free templates are available on the internet which may be a good alternative when you don’t want to pay a lot.
Once you grow your business, then you can purchase suitable business budgeting software.
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Have a periodical business review
Some businesses make a business budgeting plan yearly and some may on a monthly basis. But most small businesses draft their budget plan more often.
Most small businesses draft their budget plan more often. This is because many small businesses have cash flow problems and the business needs to prepare a plan that suits the changing environment. A well-crafted business budgeting plan can help any business to achieve its goals.
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Purchase Insurance Coverage
Although most business entrepreneurs know the importance of insurance, they still neglect purchasing insurance. Why? Because they rely on their own ability and think they can get everything done on their own. To business owners who lack the money, it is not a good choice to spend money on insurance.
As you have known, the world belongs to change, and so do fear seeds. Insurable losses can happen at any time without notice and are often unexpected. So make sure to spend on insurance to take your business a long way.
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Try joining a business association
As a small business that operates within your community, you know how important it is to give back to your community. Business associations bring together like-minded businesses and people in one place so they can work together, share solutions, and promote the unique aspects of their business.
As a member of a business association, you will have the opportunity to network with other like-minded individuals, join committees that are relevant to your business, gain insight into what’s new within your profession or industry, and explore new marketing ideas, that help to grow your business on the planned budget.
The bottom line
Budgeting is one of the best ways to keep your business healthy and profitable. It gives you a way to know the future of your business and have a goal so that you can do it more effectively. Budgeting will also help you in multitasking both short and long-term goals while doing it all. It gives you a chance to arrange your finances properly and effectively so that you won’t have to worry about anything. Happy Budget planning!
Author’s Bio
Narbhavi is the Digital marketing specialist at Zetran Technologies. She is the content writer of the company. She works for software products myplan, mybooks, mystaff, and SNAPOS.
