One of the most difficult aspects of running a business comes down to one simple word: budget. The word strikes fear in the hearts of many business owners, as the process is time-consuming and tiresome. While creating a budget may be monotonous, the thought of reevaluating it is probably in your nightmares. However, the simple act of reevaluating your budget and setting financially smart practices into motion is paramount to running a successful business. By following these 6 effective techniques, you will save time and money.
1.Stick with your budget. It’s easy to divert from an original plan – especially when it means being stringent with spending. Let’s face it: when you have the funds, it can be exciting to spend them quickly by upgrading equipment or services. However, if you stick to your budget accurately without overspending, you’ll thank yourself later. Follow your budget as if it were the single most important and unwavering factor in your business.
2. Plan ahead. The one exception to not following your budget is when a large expense is looming around the corner. If you know you are about to be hit with a large amount of expenses, then this is the time to reevaluate your profits and alter your budget for that month. Additionally, it is always good practice to plan your budget around possible financial disasters to a point. Simply setting aside an extra amount each month for your own financial insurance purposes, you will be properly prepared for anything, as even the smallest amount helps. Plus, if you don’t end up needing the money, it rolls over to the next month and gives you even more profit to save.
3. Overestimate your expenses. You may have been told to save every receipt and calculate every dollar precisely to the best of your ability, which is great practice for your tax forms. But when it comes to your budget, this practice is only going to become tedious and could potentially hurt your business. Not only is it possible to miscalculate, but it is also possible for unexpected expenses to arise at any moment. It is best to give yourself leeway when analyzing expenses. In the simplest of monetary terms, if you believe you will owe $1,700 in total, always round up to $2,000 in case of a miscalculation or unexpected expense.
4. Underestimate your profits. In addition to overestimating expenses, underestimating profits is just an important. While it is already difficult to calculate an exact answer to an ever-changing profit number each month, always remember to estimate lower rather than higher. When running a business, it’s important to set high goals, but your budget isn’t your goal sheet. Although your goals should be high, your budget should not look as ambitious. Instead, your profits on your budget document should be underestimated to allow ample room in case of a low sales month.
5. Set a trend for your employees to follow. As the head of a business, you are the standard by which your employees will model their work behavior. Practice smart financial behaviors with customers and make purchases based on your budget. If you follow your own rules, your employees will do the same. The most effective training behaviors are not developed from a series of PowerPoint slides in a seminar, but from observing the business owner in his or her every day actions. By leading as a financial example, employees will generally follow suit.Although it is important to delegate tasks among your employees, outsourcing easy work can turn into an expensive venture. It may be tempting to give others easy tasks simply because you can, but from time to time, it is good for them to see that you are willing to work side by side with them on the “dirty work.”
By following these 6 tips, your business can save money without making big changes to any specific practices. Simply make a plan, stick with it, and start saving money – which will set a model for your employees to follow as well, saving you even more money. It’s not about being cheap, it’s about being smart with your time and budget.