Running your own business is no easy task, and it’s one made all-but-impossible if your cash flow isn’t up to snuff. Creating a simple budget you can stick to is important — make that essential — if you’re going to succeed.
Here are some tips for achieving your financial goals, navigating ebbs and flows in business performance and planning ahead should the unforeseeable strike.
1. Start with a Spreadsheet
Consider Microsoft Excel your new best friend. Start by inputting unchanging expenses, such as rent, utilities and supplies. Then, move on to variable expenses, rounding up in all cases to account for the unexpected. Next, add in anticipated income, and calculate the difference between income and expenses. During the process, it’s wise to consult with a CPA, who can lend an outside perspective and introduce factors you may not expect.
2. Update Your Budget Each Month
Whatever you do, don’t slack when it comes to tracking your budget. You need to update it based on business performance and expenses, which may prove a bit more unpredictable than you’d expect. When unexpected changes do arise, take a hard, realistic look at your projections to see where you can cut back in order to keep cash flow in check.
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3. Make Changes Count
When you do need to tweak your budget, make small changes that have a big impact. You may, for example, need to up your allocation of funds to marketing to jump-start sales. Another example: finding ways to expedite invoicing and payment cycles that work for you.
4. Create Incentives
If you have (or plan to have) employees, teamwork and collective productivity is key. Creating incentives that are tied to your budget helps get everyone on board and moving toward a common goal: building the business for common good. Set your budget parameters in relation to profit, and come up with ways to benefit your team when you reach or exceed your business goals.