There are endless pressing issues when you first start your own business and it can seem logical to tackle the day-to-day tasks before anything else. But with so many businesses folding after just a few years in operation, what really makes sense is to do everything you can to ensure your company’s success and longevity from day dot. This is where budgeting takes centrestage.
A good budget is the perfect antidote and will show you where you are losing money. Here are 7 easy budgeting tips to incorporate into your business to stop the money leak:
1) Cut back on business lunches
There’s no doubt that business development is crucial, especially in the early days. However those regular lunch meetings can have quite a negative impact too. Considering most business lunches take place in restaurants instead of your usual go-to sandwich bar, they can quickly put a large dent in your finances. Try to limit the business lunches; have a coffee chat instead or meet at the client’s premises where possible.
2) Change suppliers
You wouldn’t stick with the same phone or health insurance company or even fuel up at the same petrol station if they’re not the most cost-effective option. Instead, you shop around for a good deal. Buying products and services for your organisation shouldn’t be any different. If you find another supplier that offers lower prices, discounts for bulk buys or doesn’t charge a delivery fee, then jump ship.
3) Go online
Everything is moving online these days and considering how expensive printing costs can be, you should consider doing the same. You will save on paper and ink costs, printer usage, postage and couriers. Not to mention notepads, labels, folders, pens, and even saving the space usually required for filing cabinets. At the furthest extreme, you may not need premises at all and could operate completely online, with drastic savings to be had.
4) Ordering in bulk vs. smaller quantities
Weigh up whether it is more cost-effective to order a one-off bulk buy of products or do more regular purchases in smaller quantities. The benefit of a bulk buy is that you will get all the expenses out of the way in one purchase. The big danger here is that you may not have enough money to cover the bulk buy, so perhaps a regular purchasing system will be suitable. You will have a more stable cash flow and cut the risk of running out of stock.
5) Join your industry association
If you have an industry professional association, consider signing up to be a member. You may find there are free or reasonably costed courses, professional development opportunities, product discounts or networking and business opportunities if you’re a registered member.
6) Save an emergency fund
Just as you should have a personal emergency fund, so should you have an emergency fund for your business. You never know when a hidden cost will suddenly rear its head, incoming business will slow or when a vital piece of equipment will die, so start putting spare cash aside in the budget to cover any nasty surprises.
7) Last, but most important: create a formal budget
A budget, even a very basic one, will show you where your money is going. Factor in every last expense you can think of, big and small: from the insurances, rent, wages and taxes right down to the office cutlery, potted plants and petrol. This way you won’t get caught short when the time comes to pay, and any cash flow anxiety is reduced because you know you have it all covered.
There are excellent programs out there that take the hard work out of budgeting. Reep is a cash flow management software that shows a clear picture of your cash flow, creates budgets and forecasts for the future. Contact us today to get started.