Your business finally has its budget in place. Expectations are set and the numbers are officially on paper. Will all of this come together? What if it doesn’t work? So many questions about implementing this daunting plan exist. But the most important thing to remember is this; a budget isn’t meant to be restrictive, but to be a set of guidelines to track your business spending and saving habits.
Once you’re on board, it’s time to put the plan in action. Here are some steps to take that will help your business successfully stick to its new budget:
Be flexible. If your revenue does not match your expectations, it’s time to mix things up and trim the budget. If you are taking in more than you expected, this might be the time to invest in new equipment you’ve been waiting for.
Watch your cash flow. Monitor your income closely to make sure you have adequate funds to pay the bills, particularly if your business is prone to lapses between paychecks. Cash flow problems are what kill most small businesses. Make sure revenues match expenses.
Be Conservative. When setting up your budget, it’s a good idea to overstate your expenses and lowball your expected revenue. Look into budget savers such as telephone calling plans and less expensive office furniture.
Keep a Cash Cushion. While trimming expenses to the absolute bone is always a good idea, it’s also prudent to set aside income whenever possible. If you can afford it, earmark a portion of every paycheck you get and sock those funds away in a money market account. Not only can that money come in handy for predictable expenses such as year-end taxes, it also can prove an absolute lifesaver should an unexpectedly high bill suddenly crop up.
Budget Check. Go over your budget every month and examine your cash flow to make certain your available funds are sufficient to meet your liabilities. If you’re adjusting your budget as you go, you’ll have some sort of emergency fund to take care of monthly overruns. Use it when things cost more than you thought and put money into the contingency fund if you come in under your expected numbers.
A business budget will allow you to create a focus for the direction of your business and provide targets that will help you grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business. So, now that your budget is in place, it’s on paper and ready; stick to it. It will keep you going in the right direction.