In our previous article we explained how you can set up a basic business budget – this powerful planning tool will allow you to track your company’s income and expenses, keeping your cash flow positive as you set your business on the path to growth and success.
How to plan by using your budget
Every successful venture in life begins with a great plan and while it may seem time-consuming, using your budget as a business planning tool won’t take up much time at all. By investing a few hours a month in the planning process, you’ll see great results in your company’s bottom line. With the help of your financial planner, you can easily use your budget to keep your company on the path to success – here are a few strategies to consider.
Expenses that get out of hand can cost any business a sizeable amount each month – for an SME, this can lead to serious cash flow and financial problems.
Your business budget is the perfect tool for keeping expenses in check, because it provides a list of monthly costs, arranged into categories. By checking your actual monthly expenses against the estimates in your budget, you’ll be able to control spending and keep your cash flow positive. Members of your team who control their own budgets will also be held accountable, creating a responsible office environment.
If you find that your expenses exceed the budget on a regular basis, you may need to find more affordable suppliers or take the decision to increase your monthly budget if you find that your original estimates were too low.
Every business has goals that need to be achieved, but sometimes these objectives can seem a little vague unless they have numbers attached to them. By using your budget, you can be specific about the outcomes you want when you meet with your team. Instead of asking for “higher revenue from sales”, you can set specific targets that your team will need to work towards. From their side, they will be able to discuss the targets with you and raise any questions they may have.
Speak to your financial planner about setting up a business budget, and they will work with you to fine-tune the running of your business.