Guest Post by Lily Wachtor
For small businesses, budgeting can be overwhelming. Thinking of how or where to start can be daunting. However, it doesn’t have to be that way. Many growing businesses are successful by planning and creating a detailed budget. Budgets are crucial to help smaller businesses have a better handle on their spending and track their growth in the short and long term.
A well-planned budget can make or break your small business. Read on for four ways to maximize your small business’ budget this coming year.
1. Create a documented budget
Before you can maximize a budget, a documented and detailed financial plan must be in place. Without an official budget, overspending can happen easily and surprisingly quickly. According to a survey by Clutch
, 61 percent of small businesses did not have an officially documented budget for 2018. If you’re not sure how to create a business budget, use a free business budget template
to get started. For instance, Google Sheets offers an annual budget template provided by QuickBooks.
2. Use zero-based budgeting
As you begin your small business budget for 2019, consider using a zero-based budgeting method
. Start by assessing the needs and expected costs for each area and function of your business. Don’t assume that you will (or should) spend similar amounts because you did the year before. Every year, start each area of your budget at zero and assess your needs to determine your budget.
Next, consider your business goals for 2019, as well as your long-term goals. Perhaps your goals in 2019 include increasing your sales volume, revamping your website, or streamlining your supply chain. As you examine your business’ objectives, ensure your budget allows you to reach those goals.
3. Reduce costs
The saying “a dollar saved is a dollar earned” is especially true for small, growing business and having cash on hand is particularly crucial. Finding ways to cut unnecessary costs can help small businesses prosper. One way businesses can save money is by bundling services
. Internet Service Providers offer a variety of services that your business may need — internet, TV, phone services like VoIP, website hosting, security systems, cybersecurity services, and even Virtual Private Networks (VPNs). Bundling services not only saves money but also time on installation. Packaging your services also ensures that you’ll have fewer individual tools to manage.
In addition to bundling, make sure to price shop, especially for services like internet where you will likely be locked into a contract. You can alleviate budget strains and maximize your company’s funds by simply looking for deals on what your business needs.
Additionally, because traditional marketing costs can occupy the majority of a business’ budget, you can cut costs by being more creative in your marketing. Focus on the areas and channels that are yielding the most success. There are many small, day-to-day things that you can tweak that will pay huge budgetary dividends. Consider using a shared office space to save on rent costs, make sure to turn off the lights when leaving the office, or limit office lunches.
4. Manage staffing costs
In addition to marketing, staffing costs can make up a significant amount of your business’ budget. Here are some ways to reduce your staffing costs:
- Allow workers to telecommute. Telecommuting limits the amount of office space you need (as well as overhead costs) and can be a great benefit for employees.
- Use contracted workers. Contractors provide flexibility to adapt to changing circumstances or to reduce your staff if business slows down.
- Offer creative (but inexpensive) benefits and perks. Instead of offering free meals to employees, bring some cereal and milk to the office.
- Compensate employees with more equity and less cash. Equity in the business will increase employee motivation and will cost you less in the near-term.
As you create your budget for the coming year, think about how these four tips can be implemented in your growing business. Being smart and strategic with your budget will not only help your business withstand financial pressures
but also flourish in the coming year.
Lily Wachtor is a freelance writer focusing on the relationship between technology, people, and their passions. When not writing, she enjoys reading, traveling, and finding new restaurants.