08 18 2015

Build a Better Small Business Budget

08 18 2015

Tips For Building A Better Budget For Your Small Business

Despite being the backbone of any business – big or small – many owners fail to adequately maintain and update their budgets on a periodic basis, leading to the need for small business financing. When business is going well, owners are busy keeping up, and when business is slow, looking at the books can be overwhelming.

But budgets are immensely important to your business’ operations. A good budget will make an informed projection of your expected receipts and expenditures, which can help you manage costs, determine the feasibility of profit goals and keep your business on course from quarter to quarter.

The basic components of a budget include sales, revenue, costs and expenses, which when correctly calculated will determine your projected profits. The sales and revenue represent the cornerstone of any successful budget, and should be as accurate as possible.

Here are eight simple tips for building a better budget for your small business:

  1. Write it down
    This might seem like a no-brainer, but many people simply think they can keep a running balance of revenue, expenses and other costs all stored in their head. No matter how photographic your memory is or how good with numbers you are, writing down and seeing the numbers on a page or in a spreadsheet not only helps you visualize this crucial information, it also gives you a quantitative representation of your business’ state of affairs.
  1. Don’t rush it.
    Building a successful budget requires you and your management team to invest a significant amount of time to ensure your numbers and projections are accurate so you can make informed decisions concerning the future of your business.
  1. Be realistic with it.
    As you attempt to make the most accurate projection as possible, it’s wise to err on underestimating profits. This way, if profits do not meet expectations, you might be left with unpaid expenses and the business could be left in the red. On the other hand, if you exceed your initial estimates, you will have covered your projected costs and expenses and turned a nice profit.
  1. Generalize it.
    Budgets are not intended to represent a detailed accounting of every last penny your business earns or loses. A solid budget will act as a general map for project managers to follow so they can make any necessary financial course corrections. Micromanaging every single dollar and cent would be too timely and exhaustive to be effective or efficient.
  1. Update it constantly.
    Many small-business owners tend to build a budget by determining a projected profit and then subtracting the anticipated expenses they will have to make to reach that projection. And then they put it away until next year. While this is a good start, unless you review and update the numbers on a constant basis, you will be unable to make any necessary adjustments. Business is not a static enterprise and your budget should reflect this fact.
  1. Change it accordingly.
    During your periodic budget reviews, don’t be afraid to change your projected plans to create positive benefits. You might be under-investing in your workforce or over-investing in marketing. Move some numbers around and make a change, and then during your next budget review, check to see if any changes have made a positive return on their investment. If not, return the budget items back to their previous allocations. Maintaining an up-to-date budget allows you track these changes and see what is and what isn’t working.
  1. Be flexible with it.
    Good budgets should be fairly concrete, with room for malleability. This means you might have to make hard decisions that involve compromises and tradeoffs over what you want to do versus what you must do. Your business only has so many resources to work with, so you must be disciplined when it comes time to cut popular budget items to make room for other more important items.
  1. Separate its contents.
    Be sure to properly distinguish between categories. For instance, cash flow and profits are two separate concepts that should be treated as such. Just because a company is turning a profit, it does not necessarily mean they have a strong cash flow. Without a steady cash flow, you cannot pay the necessary expenses and costs to keep the doors open and the lights on in your business.

Find Out How Much Funding You Qualify For

Fields marked with an * are required
By clicking this button I agree to all terms and conditions.

Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan.  What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number.  We will also ask for your name, address, date of birth, and other information that will allow us to identify you.  We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121.  Funding amount and credit approval is subject to a full credit profile review.