Although most of us keep track of our personal finances to an extent, budgeting for a business is on a whole different level.
Given that many people who establish start-ups are entering the world of entrepreneurialism for the first time, such a step-up can often require changes in money management habits.
This may seem daunting at first, but it’s a necessary move to take if you want to avoid falling into financial arrears.
A well-managed, well-budgeted business should be capable of sustaining itself through sales alone without the owner having to dip into their personal savings, and here are a number of ways to help you get to that point.
Compare yourself to competitors
All businesses have a certain uniqueness about them, but that doesn’t mean they don’t have similarities with others in the industry too.
Analysing the success and failings of your fellow competitors – as well as their financial situations over the past few years – can provide you with inspiration for ideas that work and warnings for those that don’t.
When doing this, bear in mind some hard economic truths when assessing how well others have weathered particularly difficult periods.
As a general rule of thumb, smaller, single product-based companies struggle to cope in challenging times more so than their larger, more diversified counterparts, so take this into consideration when analysing how successful certain schemes and approaches were during these times.
They might be boring and time-consuming, but having all your data laid out in well-categorised, formal spreadsheets can make assessing financial choices far easier.
Do this for every incidence in which money passes hands or bank accounts and you’ll be grateful later on when you can make decisions based on your incomings and outgoings in the safe knowledge that there are no flaws in your plans.
If using common industry programs such as Microsoft Excel, you can also configure your settings so that the computer works out calculations and revenue totals for you.
Alternatively, you have the information all in one place for whenever you want to do it yourself.
Make allowances for unforeseen errors
No matter how good a businessperson you are, unpredictable events will always happen and things will never go perfectly to plan. Although you cannot predict all possible occurrences, you can assess what are the most likely hindrances and estimate how much they may cost you if they happen.
Beyond this, it is wise to add extra leeway onto income revenue projections when planning how much incomings you will need for upcoming years.
That way, if worst comes to worst, you’re covered, and if it doesn’t, you have extra funds to invest.
Consider short-term loans
If your budgeting doesn’t go quite to plan, then you still needn’t fall back on personal savings. In such situations, it is worth remembering that short-term loan options – from payday loans to unsecured loans – are within reach of the majority of people.
Although many products require a good credit history to be eligible, there are countless companies who will consider those with poorer ratings and less favourable financial circumstances. This means that whatever your situation, there will be a lender out there willing to help you.