If you’re ready to get your new small business up and running, one of the first things you’ll need to consider is your budget. When you write up your business plan, the amount of capital you’ll need to get started and the profits and overheads you’re predicting for your first year or so will be essential figures – especially if you’re hoping to take out loans or seek investor support. Use these budgeting tips to make sure that your first year spent as a new business owner is a success.
- Look at all of your investment options. There’s more to starting a new business than sitting down with your bank’s loan manager and applying for a small business loan. There are plenty of creative ways to raise funds in 2018, whether you’re crowdfunding, pitching to venture capitalist investors, using credit cards, or using a funding source like Atlas Equipment Finance to get everything set up within your budget range. Do some thorough research and speak to other small business owners so you understand all of your options, then get a range of quotes so you can find the capital you need at the best possible rates.
- Know all of the risks in advance. When you make your business plan and consider your budget, you’ll need to assess the specific long and short-term risks that could impact the business financially. Conduct a thorough risk assessment looking at your industry and local economy specifically, and understand how much of your profits need to be put aside to cover any potential damage caused by these risks.
- Round up your expenses. Be harsh on yourself when creating a budget for your business. Be sure to round up all of your expenses and overestimate exactly how much you’ll need for each element of the start-up, from the equipment costs to the labour salaries. It’s always better to be over-cautious than to run out of money through lack of realistic planning. Every project you encounter will have varying expenses and client expectations, so over-estimating the expenses will give you a comfortable buffer should things become more expensive than you envisioned.
- Consistently save money. This may seem obvious, but some small business owners make the mistake of splashing out on big investments or luxury personal purchases when they finally hit that profitable month or project. Plan ahead to always set aside a certain amount of your profits to go toward your business savings account. You never know when you could hit a downturn and need those savings urgently.
- Revisit your budget on a regular basis. The more frequently you sit down with your budget and give it a refresher, the stronger your finances will be. Your business plan and budget should be fluid and flexible, so make sure to revisit it anytime something changes, or whenever you hit a new month or begin a project with different budgeting requirements. Keep separate monthly and annual budgets and sit down with each of them regularly with your business partners to keep an eye on your current expenses and savings. This will help you spot potential problems before they cause a larger issue, and will give you a stronger level of control over your business’s finances moving forward.