All the answers to your unique business lifestage questions
A well-managed budget is the foundation and the scaffolding that you need to build your business. It helps you track performance while keeping an eye on the future.
It tells what you can spend and how much you need to make. It helps you set goals and priorities. But a budget should also be flexible enough to allow you to take advantage of unexpected business opportunities.
Follow these tips to make your budget work for you:
- Set specific goals, eg, to increase turnover by 10% while keeping costs static.
- Use as much data as you can when planning, eg, past financial statements and invoices.
- Be sure that each expense category is a fixed expense that occurs each month on a set date for a set amount, like rent.
- Variable expenses, such as advertising, can be controlled by monitoring what you spend and reducing or increasing it accordingly.
- Ensure that you have money set aside for fixed or variable periodic expenses.
- Review your budget each month or quarter to check expenses against your financial plan. You may be under budget in one category and over budget in another. Find out why and amend your budget accordingly.
- A budgeting tool is a must and should form part of your software accounting package, either in the form of a ledger you keep manually or an Excel spreadsheet.