Creating a budget is an important part of running a successful business. However, creating a budget or company financial plan can be difficult. That’s where Next Level Now comes in; our outsourced financial services will help you get your spending in check to optimize business growth. Learn four steps to start budgeting your business.
How to Create an Effective Budget
Here are four tips to help you create an effective budget:
- Start With a Purpose. A clear purpose will help you create an effective budget. Begin with an overall goal for your business. Then determine how your budget can help you achieve that goal. For example, you may decide that your goal for this year is to grow your sales by 10%. In order to accomplish that, you will need to spend some money on advertising or marketing. So your first budget line item should account for those expenses.
- Do Your Research. Gather as much information as possible before you start drafting your budget. Use the previous year’s sales figures as a starting point. Compare this year’s numbers to last year’s figures to determine any increase or decrease in sales. Find out how much each department contributed to last year’s sales and how much of that contribution is expected to continue this year. This will help you determine which departments will receive the biggest share of the budget. Once you have finished your research, you can draft a first draft of your budget.
- Consider Your Employees and Their Needs. An employee spending policy is an essential part of every business’ budget. It outlines the rules for employee spending and helps companies avoid potential legal issues down the road. Make sure you outline clear guidelines for employee spending in your budget. For example, you may want to specify that employees should not use company funds for personal purchases such as new clothes or electronics. You will also need to set a maximum limit on individual spending and provide guidelines on how bonuses and other compensation should be distributed throughout the year.
- Be Realistic. Know your numbers and stick to them. In other words, don’t fudge the numbers just to get more money in the budget. A successful budget is based on accurate data, not wishful thinking. If your revenues are less than expected, you may need to revise the budget to reflect your current financial circumstances. On the other hand, if your revenues are higher than expected, you will want to adjust your budget to account for those extra funds.
Determining a Company Financial Plan Is Important For Business Growth
When a company begins to expand it will need to determine what it needs for expansion and what its current capital requirements are. The budget for running a business should include all costs related to daily operations as well as the costs of expanding operations. This includes everything from salaries to utilities to travel costs to office equipment and everything in between. Businesses should prepare annual budgets to make sure they are getting the most from their financial resources while staying within their set budgets.
How to Make Your Business SOAR
Setting a budget and a realistic company financial plan is just an initial step towards business growth. Next Level Now’s Fractional CFO and Outsourced Accounting will help you gain financial expertise at a fraction of the cost of hiring internally. Our experts handle the financials while allowing you to nurture the other vital areas of your business. This winning formula will boost your company’s profitability and success. Contact us to start today!