Managing Your Business Budget
23 November, 2011
Managing a Budget is Not Your Enemy, But Your Success!
When you manage your business funds wisely and spend your dollars with care, the chances are you are more profitable. By managing your business budget and staying lean you actually prepare your business for growth, as you will be cashed up and able to afford it when the opportunity presents itself. Growth generally comes after tight times. There is low consumer confidence at the moment in Australia, so people are saving up. When this turns (people start to spend) some businesses will be ready to take up the opportunity, whereas others won't.
Some Smart Ways to Manage a Budget
Start off by being proactive. Don't put your head in the sand! If you take a proactive approach, things will more likely improve and get better for you and your business, as you will be ready. Here are some practical tips you can adopt for managing your business budget:
- Start by understanding your costs; set up a budget if you don't already have one, and compare ongoing income and expenses against that budget.
- Cut optional expenses; look at your spending patterns and see if you need to spend the money, or can you spend it more wisely?
- Focus on better ways to make money - not just on saving or cost cutting. Budgets can set stretch targets and can involve spending money to make money, so make sure you have the right balance of things on the go.
- Be smart, and this might mean "not being cheap"! For example, hiring admin support is actually a smart decision if it frees you up to run your business rather than be bogged down in detail that does not generate income and growth.
- Look at the utilization of your resources; make sure you use them wisely. Money is a resource, and this is often forgotten. Use it wisely and make it work for you if you have any in excess of your immediate needs. Many businesses forget to do simple things like setting up an interest bearing account to move excess funds into (even on a short term basis), instead of keeping it all in their everyday cheque account that probably only has bank fees associated with it. This arrangement can result in you earning money, rather than leaving money idle.
- Delegate and manage your time. Look at where things can be done in-house or outsourced. Simple things like designing flyers, preparing newsletters, writing blogs, updating your website, could usually be done more effectively in-house, at least in preparing the first draft. Simply, look at what can be done in-house, before you jump to an outsource solution.
- Negotiate with your customers and suppliers. Don't become complacent about price, service or terms, be proactive.
- Look at and learn from your mistakes. If you get to understand your cost / spend pattern, chances are you can learn from your spending cycle.
- Don't spend if you cannot afford it. Taking on more credit is not necessarily the right approach.
- Known your legal obligations in terms of finances, terms of trade, etc. Understand whether you are solvent or insolvent, and seek help if you need it. Act early rather than bury your head in the sand.