Starting a business requires an initial investment, however, your expenses do not stop there. Young business owners who are just starting out face an immense amount of responsibility when it comes to running their businesses. Mismanagement of money often forces business owners to shut down, and even worse file for bankruptcy, before they even have a chance to be successful.
Creating a budget that is realistic and going to help your company be successful is a very important part of this, but it can be difficult to know the best way to go about it. If your business is just starting out and you need to create a budget, here are some helpful tips to get you started.
- Talk To Your Employees
You may be the business owner, but you hired employees so you wouldn’t have to do everything yourself, and this can include things like decision-making and brainstorming. Creating a budget for a company is a huge task, and it shouldn’t fall on just you to do all of the thinking. This will also create a better relationship between you and your employees because they will be personally involved in deciding things that also affect them.
You hired your employees because you felt that they would be an asset to your company, so utilizing this asset when it comes to planning your budget can be extremely beneficial. Any proposed budget should be analyzed by other members of your team so that they can make suggestions and improvements. This will also allow them to understand any changes that are going to occur, and what to expect moving forward.
- Overestimate Expenses
You cannot always accurately predict the future, so it is helpful to give yourself a cushion to fall back on. When you are factoring your expenses into your budget, you want to overestimate the cost a bit. This will ensure that you are not caught off guard if something goes wrong or you have an unexpected expense.
At the end of each year, if you have not spent this extra money on expenses, it will be an unexpected addition to your profit. However, if something comes up that you did not account for in your budget, you will not find yourself scrambling to pay for it.
- Time is Also Money
A budget isn’t entirely about money, and many young business owners forget to also consider that their time needs to be incorporated into their budget planning. Treating your time like money ensures that you are utilizing all of your resources the most efficiently. Whether it is your time or that of your employees, you want to make sure there are clear goals for how long tasks should take.
For example, if your company works on a project-to-project basis, you need to have a set expectation for how long each project should take. Likewise, each aspect of the project should be broken down into time slots, so that everyone in your company understands what needs to be done to reach ideal productivity. You and your employees will be able to work more efficiently when you have a clear understanding of the expected goals.
- Revisit Your Budget
As your company grows and changes, so should your budget. Your budget should never be consistent, it should be revisited frequently, especially if your company is growing quickly. A good rule of thumb is to revisit your budget monthly to ensure any necessary adjustments are made.
Roni Davis is a writer, blogger, and legal assistant operating out of the greater Philadelphia area
