New Year, new budget, should be the mantra for small business owners who have procrastinated in formulating their 2016 annual budget. To help you populate those cells with data you’ll need to operate successfully in this new year, we’ve put together a few things you may want to consider.
Every business needs some formal yearly budget process that spells out if there is enough money to fund or expand operations and generate income, according to investopedia.com.
Some of the major benefits of having a formal budget include:
- Insight on locating funds for unexpected expenses throughout the year.
- Having a record of business expenses that you can eventually use for your taxes.
- Being able to identify wasteful spending and better ways to fund your business growth.
When crafting a budget, look over the past year and analyze your income. Use those analytics to understand your revenue, profit and expenses. You want to know how you earned and spent every penny, and how your marketing spend affected those results. .
As you are creating line items for your budget, be mindful of essentials like rent, insurance, payroll, utilities, inventory and other incidentals you’ll use monthly. You’ll also always need to keep funds available for things you can’t budget for like repairs, travel and marketing.
Marketing is a peculiar line time for any budget, because it might be the single expenditure that will allow you to make you money when you spend money. Unsure about how those marketing dollars can pay off for your small business? Consider hiring a marketing consultant to advise you on which strategies can be tailored for your market.
Another tip is to analyze your annual budget month-by-month, in more digestible chunks. You will be in a better position to catch anomalies in your budget that might signal waste or even worse, theft. The people at businessdictonary.com say this is particularly noticeable in the restaurant industry where theft of food products is increasingly common.
Proactive yearly budgeting can help to establish a simple and effective practice that will save your business year after year. With a clear-cut view of improvable areas, and insight into how your business grows, you can have huge success over time.