Many of them will come from outside your operation: clients, suppliers, regulators, etc.
However, many small businesses owners fail simply because their budgeting skills are lacking. No matter what advantage you may think you have, if you’re not constantly looking to improve your small business budget, that advantage won’t be worth much.
3 Ways to Begin Improving Your Small Business Budget Right Now
You should never go too long without reviewing your small business budget. Even if you think it’s doing well for you at the moment, one of the three tips below could dramatically improve it almost immediately.
1. Compare Your Small Business Budget to Industry Standards
This is an incredibly helpful step you can take that will give you important insights into your budget right away. Yet most small business owners never do it.
Your local library will be a good source of information about your industry. You can also find helpful data on the IRS website.
You can also take a look at companies outside of your industry. Ask around your local business community and many owners with similar-sized operations will be able to help you.
Every small business is different, so every small business budget will be, too. Nonetheless, it’s still a good idea to see where yours compares with others.
2. Keep Tabs on Your Spending and Revenue in the Same Place
On the one hand, your budget needs to be more than just “revenue vs. costs.” While there’s something to be said for simplicity, this leaves far too much to be desired. You need to break your costs down into detail and do the same with your revenue streams.
That said, you do want to keep this data in one place so it’s easy to look at all of it at the same time. You’d hate to lose profits because one of your suppliers upped their fees and you didn’t adjust accordingly.
By far, the easiest way to do this is with small business budget software. While there will be a bit of a learning curve, the benefits are worth it.
3. Factor in Lots and Lots of Slack
Never fall into wishful thinking when you’re budgeting for your small business. Even if you’re normally pretty level-headed, it’s very easy to overestimate your profits and underestimate your overhead. That never ends well.
Instead, factor in lots of budgetary slack. Over time, it may become tempting to roll that back a bit as you become more confident in your numbers. We recommend against that. Simply enjoy beating your profit forecasts every year and you’ll soon have a nice nest egg you can spend on something important.
Could Your Small Business Budget Use Some Help?
As a small business owner, you may often feel like it’s you against the world.
It doesn’t have to be that way, though.
At Mooney Lyons, we love helping small business pursue success. One of the many ways we do this is by working with them on their budgets.
If you’d like the financial confidence that comes from knowing you have financial professionals in your corner, contact Mooney Lyons today.
The opinions voice in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Third party budgeting software referenced are not affiliated with, nor endorsed by, LPl Financial.