Here are a few tips that have helped me with budgeting for my business.
Tip 1: Set Monthly Earnings Goals
When creating a budget, one of the first things I like to do is set a monthly earnings goal.
This way, you can ensure you’re allocating enough money to meet your business’s goals.
Not hitting your earnings goals? Allocate more of your budget to sales or marketing!
Tip 2: Set Monthly Spending Goals
You should also set monthly spending goals based on the money you have coming in.
This means establishing how much money you can spend on supplies, advertising, and other expenses without exceeding the budget.
When I ran my agency, we allocated a certain percentage to OPEX (operating expenses). From there, we created different “buckets” for an owners draw, taxes, profit and even marketing.
Tip 3: Analyze Areas of Weakness
When tracking your budget, it’s crucial to analyze areas of weakness.
Are there any expenses that are higher than they should be? Are you spending too much money on advertising?
These questions can help you identify problems and make necessary changes to keep your business running smoothly.
Tip 4: Make Predictions Monthly on the First
I recommend making predictions monthly on the first day of the month.
This helps you anticipate any expenses or revenue changes and make better budgeting decisions for the next month.
Pro Tip: You should create a spreadsheet with two columns every month. Column A should be your projected budget, and column B should be your actual budget. From there, review your budget at the end of the month!
Tip 5: Factor in Seasonality/Industry Trends
When creating your budget, it’s a good idea to factor in seasonality and industry trends.
For example, if you have a business with seasonal peaks and troughs, then account for those in your budget.
The same goes for any industry-specific trends. If demand for your product or service declines, adjust your spending accordingly.
Tip 6: Keep Your Personal & Business Accounts Separate
Your personal finance should not be mixed in with your business finance. Keep the accounts separate!
Having two different accounts will help you keep track of your expenses on both sides and avoid any confusion.
Tip 7: Choose a Solid Budgeting Tool
Finally, choose a solid budgeting tool to help you stay organized and on top of things.
Plenty of different options exist, from cloud-based tools to spreadsheets. Choose the accounting software that works best for you and your business.
For budgeting, we usually use Quickbooks (because it’s cheap and easy to use) but most other apps will work.
Tip 8: Be Conservative With Revenue
When estimating your monthly revenue, be conservative with your projections.
Don’t overestimate how much money you’ll earn this month. It’s easy to get carried away and spend more money than you have coming in.
If you are conservative, you can ensure that you always stay within budget and meet your goals.
Tip 9: Plan for Business Growth
Lastly, always plan for growth.
This doesn’t mean you have to make large investments or take risks; it just means that you should be ready to scale up when the opportunity arises.
Keep an eye on industry trends and make adjustments to your budget accordingly.
That way, you can ensure that your business can grow without putting too much strain on the budget.