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Top 4 budgeting tips for your small business
If you’re running a small business, developing budget (and sticking to it) is crucial to ensure your cash flow. Did you know that poor cash flow is one of the leading causes of business failure?
1. Work out the best time frame for your budget
For some businesses, the best budget time frame could be weekly, for others it could be fortnightly, monthly or quarterly. It depends on the timing of your business revenue streams and expenses.
2. Draw up a budget with two columns: revenue and expenses
Forecast all your revenue streams in the revenue column. Make sure those forecasts are realistic. Being conservative with your revenue forecasts is safer than being overly optimistic. Make sure your forecast revenue streams match your chosen budget time frame (weekly, fortnightly, monthly or quarterly).
Divide your expense column into two categories: essential and non-essential. Overestimating your expenses is safer than being too optimistic. Try to eliminate or reduce any non-essential expenses. Again, make sure your forecast expenses match your chosen budget time frame (weekly, fortnightly, monthly or quarterly).
Budget
Revenue $ Expenses $
Essential Expenses
Non-Essential Expenses
Total Total
Total your forecast revenue and expenses. It’s obviously important for your total revenue to exceed your total expenses, otherwise you’ll have cash flow issues
3. Regularly review your budget
Once your budget is in place, it’s important to track your revenue and expenses against it so you can identify any potential cash flow issues as quickly as possible. For example, if there is a blowout in your expenses so that you can take corrective action.
4. Hire a bookkeeper
A bookkeeper will be able to help you set and monitor your budget if you don’t have the time or the skills to do it yourself.
How we can help
At Scorpion Bookkeeping, we can help you to set up a Xero online bookkeeping system for your small business. We’re a Xero-certified advisor.
We can also help you with any bookkeeping support services that you may need, no matter what type of business you have. We currently have clients in a diverse range of industries in South Australia, Victoria and New South Wales.
Contact us today to find out how we can help your business!