From the moment your business starts making money, you need to start thinking about what happened last month and how those changes affect your future budget. As a business owner, your budget evolves, where one day you’ll be focused more on emergency repairs, and another, you’ll be prioritizing hiring more employees. Without a budget, you’re looking at a financial mess that you can’t control, so now’s the time to get a budget going the right way. Here are three tips to budget smarter so your business keeps making the money it deserves.
Prepare for Unexpected Expenses
From problems with plumbing to roof repair and water damage, there will be times when you have to spend your money on unexpected expenses. Some expenses, such as damage associated with heavy precipitation or vandalism are likely to be out of your control as a business owner. But looking for ways to think ahead, such as hiring a roofing contractor or installing a security system, can help you keep money in your pocket when you need it the most. Office buildings make up the largest portion of commercial cleaning contracts in the industry. That accounts for 31% of total contracts. So, even the kind of building your business is located in can have an impact on the kind of expenses your business incurs.
Use Live Data for Accurate Results
One of the worst financial mistakes you can make is using dead data to inform live strategy. Everything from the money that’s moving in and out to the costs of monthly expenses should be tracked and evaluated in real-time. Not only do you need to be able to see the data, but you need to make sure the way you adjust your businesses’ budget reflects the most recent data available. Using applications and budgeting software is an essential step in keeping an accurate budget with live data. Should your business receive more or less money, you’ll want to pinpoint patterns that signify poor financial decisions. Having live data for the money your business makes is a crucial step in improving your finances long-term.
Revisit Your Budget for Clues and Insight
When you look back at your budget, you may realize that a year ago, you were spending more money on maintenance and repairs. You might look a little deeper, and realize that the extra money on repairs was because of a change you made to the exterior of your business. That kind of insight comes with being able to look at how you’re saving money and see what you’re doing right. That way, you’re better equipped to realize what you’re doing wrong. You need an updated picture of your businesses’ finances, and you’ll have to revisit your budget to figure out how to improve your money. For example, you may not know that you can reduce costs on certain things, like fixtures, templates, and gauges, by 3D printing them, but if you find out that you can reduce costs by 60-90%, you may decide to switch to 3D printing items instead of traditionally making them.
Roughly 24% of small businesses splurge on laptops, 17% on desktops, 12% on servers, 7% on networking, and 6% on mobile devices (6%). An additional 5% spent a lot of money on security appliances, while another 5% spent big money on printers (5%). Finally, 5% of small businesses splurged on peripheral, and another 5% on external storage. So, you can see the way businesses spend money changes over time. Those businesses and their spending differ depending on their nature and purpose.
Now that you’ve learned ways to better budget for your business, you can put your money to good use by looking at your revenue to identify strengths and weaknesses. Maybe upon review, you notice you’re selling a particular product at a faster rate than before. With that knowledge in mind, you can adjust your spending to focus specifically on selling more of that product. The point of preserving money as a business owner is learning to capitalize on beneficial financial decisions and not lose out too much on mistakes. The key to doing that is creating a budget you can stick with as long as you’re using the right methods and techniques.