4 Ways to Stay in Control of your Business Budgeting

Managing your budget effectively is important to successfully run a business.

Sales may be bringing in healthy revenues, but the income and profits you’re generating can quickly be eaten up if you’re overspending on operational costs, marketing campaigns, staff payroll or investments in new hardware and software.

To stay in control of your finances, consider implementing these strategies:

1. Embrace the power of budgeting

   

    

   A simple breakdown of income and expenses in an Excel spreadsheet can be a great starting point. To get started:

   • Track your projected sales to help you understand your future revenue numbers and have a solid projection for your income over the course of the year, or budget period.
     
     
   • Calculate your costs, including fixed costs like rent and utilities, and variable costs like inventory and marketing. This gives you an understanding of your total expenditure.
     
     
   • Set clear budgets for the coming period’s spending, based on the total income you’ve predicted and the total fixed and variable costs you’ve estimated.
     
     
   • Don't forget to regularly review your budget. Reviewing and updating your budget helps you stay on track, identify areas for cost-cutting, and make informed decisions about resource allocation.
     
     

2.  Track your budgets, income and spending

   There are cloud tools that can help you record your incoming and outgoing transactions in real-time, so you can work with the most up-to-date numbers and financial data when reviewing and reworking your budget.

   To improve your tracking:

   • Use codes to categorise your expenses in your accounting software.
     
     
   • Review your spending – check your spending against each code and see where budgets are on track, or where there’s overspending that’s threatening your budget. 
     
     
   • Plan for seasonal trends and patterns – tracking your income and expenditure helps you to spot, predict and plan for the financial ups and down you’ll experience over the year.
      

3.  Separate your personal and business finances

   By having separate business and personal bank accounts, you can easily track your business expenses and manage your budgets. There’s no confusion around personal expenses that could potentially muddy the water.

   Consider getting a business debit card – a business card helps you to pay for business-related costs directly from your business bank account. This helps you to track your expenses and keep a closer eye on your budget.

4. Forecast for the future: don't just track the past

   

    

   Basing your budget and financial strategy on historic data is a great foundation stone. But you can also use this data to project the data forwards in time and create useful forecasts.

   Using your historical sales trends and projected expenses, you can quickly estimate your future cashflow. Having this view of your future cash position is extremely helpful when setting out your budget for the period.

   Cashflow forecasts can help you plan for seasonal fluctuations, identify potential funding needs and make informed decisions about the short, medium and long-term strategy of the business. Read this DVA Blog to learn how to gain competitive edge in your cashflow management through cashflow forecast.

Talk to us about getting on top of your budgeting

As your trusted adviser, we can:

• Streamline your record-keeping, bookkeeping and financial reporting.
• Give guidance on budgeting, forecasting and financial management.
• Ensure your cashflow and budgets are always looking positive and healthy.

Visit our Advisory Services Page to know more about our services.