You would have most likely begun preparing your 2018 budget and as goes for most businesses, increasing efficiency while keeping costs in control, would be one of your top priorities. For small businesses and start-ups, budgeting is an extremely critical activity as it helps determine how much cash flow they have/need to get in to fund operations, fuel business growth, and generate a sustainable revenue pipeline. Without a short-range (month-to-month for up to a year) and long-range (quarter to quarter for at least 2-3 years) budget in place, a business runs the risk of over-spending or conversely, under-spending, both of which are detrimental to competitive success. That said, there is no one-size-fits-all formula for a fool-proof business budget.
Whether you budget manually or use a software tool (there are plenty of templates to get started), the hardest part is making that budget plan work. Let’s admit it, most of us forget about our financial goals we started the year with, barely six months down the line. So how do you keep that from happening to you again in 2018? Leverage our proven tips to get started:
#1 Review your 2017 budget to set realistic targets for 2018: How did your 2017 budget fare when it came to mirroring your profits and expense statements? Were you just a little off the handle and able to get on track with some optimization as the year progressed or did your budget go completely awry? Analyzing past performance will help set realistic goals ahead, plus you would also know the seasonal lulls and highs to prepare for. Historical data research will also help you predict and budget for hidden and unexpected costs.
#2 Re-assess short-term and long-term priorities: Given today’s dynamic markets and consumers, it’s likely that your business priorities will change, at least in the short-term (1 to 3 years). Typical short-term goals may include hiring more employees, adding inventory in high-selling categories/geographies, opening an emergency fund, etc. while long-term goals may look like retirement planning, starting a channel sales network, and others such. Now put a timeline against all your goals and assign an order of priority to each, so you know how much capital to budget for achieving these and when.
#3 Seek innovative cost-saving opportunities: Running a successful business is all about smart operations. Can you hire part-time or better still, remote employees such as virtual assistants instead of full-time employees to handle administration, accounting, taxes, and even some specialized work such as social media marketing? According to research, hiring virtual assistants can save up to 40% of operational costs for businesses – no infrastructure costs, freedom from fixed salaries and employee benefits, and flexibility to scale up/down as required. Once you start delegating work to professional virtual assistant firms, you’d be surprised how they can seamlessly work as your extended team without you having to shell off precious dollars in upfront investment. Have you planned to make the cut for a VA in your budget 2018?
#4 Automate your savings: Let’s say you have big-ticket plans in the near future for which you need to have adequate fund by a specific timeline. Divide the funding by the number of months/quarters you have and set auto-debit alerts in your company account for that money to be transferred to a separate fund each month. This will ensure you save up and stay away from falling in a debt cycle, which is all too easy for small business owners and start-up entrepreneurs.
No budget will run smoothly through the year – you will have to revisit it, optimize according to business performance/industry trends/market fluctuations, and then measure what’s working and what’s not. Happy budgeting and here’s to a hugely successful 2018!