You might have thought the hard part in setting up a business was getting the finances sorted to set up in the first place, but making sure you have enough money to run your business each month can be equally as tough.
As a small business owner, it’s important to create and maintain a reliable budget to help you to keep your finances in check and reduce the level of uncertainty that comes with running your own business.
At Magpie Accountancy, we have put together 6 tips to help you create a sustainable yet realistic budget for your company…
1. Allow enough time
Don’t expect to get your budget created in a day, it’s not going to be a quick task! Allow at least 2-3 months to prepare and get all receipts, invoices and stakeholders together. This will help you to ensure you have covered everything.
Block time out in your diary to work on the budget so it doesn’t end up a last-minute panic.
2. Be realistic
It’s pointless creating a budget if you don’t make it attainable – this will just leave you and your employees feeling stressed out and de-motivated.
Use past business results and future projections when setting your budget to make sure it is realistic.
3. Involve the right people
Just because you’re the business owner, it doesn’t mean you have to complete the whole budgeting process by yourself.
Ask for contributions from relevant people elsewhere in the business to ensure nothing has been forgotten, as well as checking that everyone knows what will be expected going forward.
4. Revisit monthly
Once you have finished your budget you can’t just forget about it until next year – your budget should be adjusted regularly to allow it to evolve with your business.
Updating your budget monthly with actual figures from the previous month will help you to manage your cashflow and ensure you are on track.
If you realise you have made a mistake, it’s ok to adjust your budget during the year.
5. Consider seasonal trends
If your business has a particularly busy or slow time of the year, make sure you take this into account when creating your budget.
Keep outgoing costs down in quieter months where possible, and have some money in the bank as a backup if income is lower than expected.
6. Factor in the unknown
You never know what’s going to happen, so add in some contingency in case something goes wrong. A project could take longer than expected, or you could lose a regular client.
If you have worked these possibilities into your budgeting, you won’t be as stressed out if the worst happens.
If you need some help creating a budget for your business, get in touch. Magpie Accountancy will be happy to talk you through how we can help.