Budgeting Tips for Small Businesses
Time and time again, small business owners struggle because they don’t have an up-to-date budget for their business or simply do not have the time to prepare one. The importance of a budget cannot be stressed enough as it is a vital tool that will help you with your company’s cash flow.
Budgeting is often viewed as a tedious and complex task- one that is simply ‘too hard.’ However, taking the time to implement a budget will see your business reap the rewards by providing a better way to gain greater control of your bottom line.
To help you with your business budget, follow the tips below:
Analyse last year’s budget: Review the results of the previous year’s sales, costs of goods and expenses. Track the percentage change and analyse what has increased and decreased. If sales have decreased and expenses have increased alarm bells should be ringing.
Watch Your Cash Flow: Cash flow issues are the number one killer of small business. Ensure you have the revenue required to meet your liabilities. If not, cut down on unnecessary expenses until your cash flow is positive.
It takes practice: Like any new tool, budgeting takes practice. Regardless of how difficult it may be to estimate the future, your forecasting accuracy will improve and you’ll be better able to control the results by actively using a budget.
Watch your Drawings: Money from the business belongs to the business. Don’t treat your business bank account as your personal earnings. Pay yourself a fixed amount for working and don’t be tempted to pull more from the account. Expenses such as mobile phone and electricity bills that are personal but paid by the business have a habit of adding up so ensure you are monitoring these expenses.
If you find you are still having trouble preparing a budget for your business, contact the accountants at The Quinn Group. We can help you better understand your business’ cash flow needs. Submit an online enquiry via our website www.quinns.com.au or call 02 9223 9166 to arrange an appointment.