Make smart decisions for better money management.
by Alyssa Gregory
Many small business owners struggle with finding sufficient funds at some point in the lifecycle of their business. Startups that have investors and capital rolling in are not the norm; bootstrapping and working with tight budgets is. Successful business owners learn how to be creative and smart when it comes to spending money on their businesses.
An important part of budgeting is figuring out where you can cut costs in your business so you can improve your bottom line. The good news is that technology presents many options for small business owners. With the right low-cost technology solutions, small business owners can reach more potential clients, create more products and services, and serve their customers better than ever before — all at a reduced cost.
Technology can help small business owners leverage limited capital in smarter and more effective ways.
In business, a budget can be an effective tool to help you determine whether or not your business idea and the execution of it is viable. It also gives you an opportunity to evaluate your current financial situation and tailor your plan in a way that will help you reach the financial goals of your business. Plus, maintaining a budget for your business on a regular basis can help you track expenses, analyze your income, and anticipate future financial needs.
The first step of creating a budget is identifying your goals and reviewing the financial impact of those goals.
Take time to conduct a thorough review of your finances as they stand today, including your outstanding debts, past tax returns, assets, liabilities, income statement and balance sheet (for existing businesses), and a projection of immediate cash flow.
What are the specific costs associated with each of your goals you identified? This is where you would break down each goal into an annual tangible amount of money, and then break it down by month.
You won't know what kind of income you are capable of making with your business until you are doing it, so at this point, it's all about reviewing the research you conducted for your business and marketing plans, and making well-rounded estimations.
Taking the information you have from Step 2 and Step 3 above, the next step is to develop a spreadsheet that will act as your actual budget. One way to do this is by working backwards from the bottom line and seeing where you end up.
If you are just starting your business, part of your budgeting process includes figuring out how much capital you need to start your business. The Six-Month Start-Up Capital Estimator worksheet included with this toolbox will help you determine how much money you need to cover the first six-months.
Then, use the Monthly Marketing Expense Tracker to plan out your marketing activities so you can use the funds you have available in a balanced and effective way.
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