Small Business Budget Planning


Whether you use a small business budget software tool to track and project expenses, or establish a template-based spreadsheet that you’ll update monthly, your small business budget can act as a strategic plan, of sorts, that manages risk and makes you a more informed business owner. When you budget consistently, you’re empowered to forecast upcoming financial demands, proactively manage expenses, and establish appropriate sales and productivity goals.

Here are some tips to help you begin — and optimize — your small business budget planning.

Identify what you can count on — and what you can’t

You may not be able to predict when a vendor will be slow to pay, when a competitor will move into the neighborhood, or what trends will impact customer demand. Yet, you can predict which aspects of your budget are sensitive to any of these potential changes, and proactively prepare for them by diversifying your products, expanding your client base or optimizing margins.

Project expenses to be higher than you anticipate

Fixed expenses such as rent are easy to predict from month to month, but it’s wise to build a cushion for any costs that could fluctuate slightly, including utility bills, operating and staffing expenses.Think overestimating expenses will put additional (and unnecessary) strain on your small-budget business? Budgeting is ultimately about trying to control your businesses financials, while simultaneously managing your risk. When you overestimate expenses, you have an additional layer of protection so you’re not struggling to come up with cash at the end of month when you encounter unexpected financial events.

Consistently analyze your sales cycles

Small business budget planning can be challenging the first years you’re in business; you may not have a full understanding of the revenue you’ll generate from one month to the next, or what factors determine demand.But when you monitor sales cycles consistently, patterns will begin to emerge. These analytics help you prepare for changes in demand due to factors such as seasonality, the economy and external competition — so you can proactively prepare your small business budget to adapt to these factors before you’re cash strapped.

Hope for the best, plan for the worst

Regardless of how cash-stable your business may be, an unexpected event related to a natural disaster, theft, lawsuit or medical emergency could present financial demands you’re not equipped to handle. Hopefully, such a crisis will never happen — but if you’ve already taken steps to ensure you have access to a small business funding solution you can access if needed, you’ll have a safety net to turn to in times of financial need.

Establish a separate account for tax payments

Taxes are a reality of running a small business, and can represent a significant chunk of your budget. (Nonetheless, you can’t avoid them). Establish a separate bank account to deposit the cash you’ll need to make quarterly tax payments, along with funds to cover what you owe for payroll, sales and excise taxes. When you keep tax money separate from the rest of your business financials, you’re adequately covered to pay the taxes you owe — and won’t be tempted to dip into the fund if you have an unexpected cash flow shortage. Contact our financial experts at Lendr for more information!


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