New Year, New Budget? Why Budgets are Key for Small Business

By Sarah DeGeorge on January 4, 2018

You have probably double, triple, or quadruple checked your budget for the last year. A budget is what keeps your small business in order with both incoming and outgoing money, right?

Whether you are a hair salon, pest controller, or bakery, you need a budget and it needs to be followed to the best of your ability. You neither want to be too tight with a dollar or overspend your limits so that you run out prior to years end.

While budgets are an obvious part of each business, do small businesses really know why a budget is important? Below are some key examples of why, as a small business, you need to keep an eye on your budget, and also some areas to focus your spending in the next year.

Why a budget is important

You can easily see what is coming and going

Without a clear idea of what you are spending and earning, you will be completely in the dark when it comes to any business decisions in 2018. Even something as simple as buying new products for your pest control business or office supplies for your accounting firm will not be made in the most intuitive manner if you don’t have a budget in place for these expenses.

Budgets can help you organize costs

As stated above, sometimes seeing is knowing, and that is true with budgets for all your business expenses. If you know the price point of each purchase you need to make, sponsorship you want to contribute to, or service you want to add, then you can easily find a place to slip it within a budget.

You can make better decisions when you know your budget

The best decisions you can make with money in your small business is when you have a full-picture idea of what is being spent and purchased and plan accordingly. Even if you overspend one month, if you have a budget then you can find a way to make the loss work to your benefit in a later month.

Best places to use budget

New equipment

A new stove for your bakery, a new truck for your pest business, some new cash registers for your antique shop. Whatever the new equipment is, if it seems necessary to increase output and ease up functionality in your business then it is a good purchase. Keeping your budget fluid for both planned and unplanned purchases is a smart idea, so always leave a little extra in this portion of your budget when you are balancing numbers and planning your year.

Extra help and hiring

Sometimes, your business begins to grow and you cannot do all the work yourself. While hiring on a new employee means money going to them, in the end, you’d rather have a business running smoothly and impressing customers then saving money but not having any functionality because you are strapped for time and resources. Always leave the small availability of extra help, if needed. The position does not need to be a full-time one, but even a per diem assistant could take some stress off of you–so keep it in the budget.

Paid marketing

How will you business get your name out to others? If you are established, then perhaps word of mouth still works, but for new businesses then paid marketing may be an essential part of your budget this year. Putting a little money out to get your footing on Google Search and other platforms could be the difference between 10 customers and 100 customers walking in your door. Moving your budget around to reflect a need for paid marketing is a smart move for your years budget if you need an extra boost in publicity.

Your budget is an essential part of your business. Without one, you are free to do whatever you want with your money–which could be a major detriment if you are too tight-fisted or frivolous with your spending. Clear ideas of what you spend and earn can make other parts of your business purchases come easier and in a more calculated fashion.