Minimising costs is one of the largest tasks every business faces. Whether you are one month, one year or one decade in, keeping costs low will remain a priority. However, finding ways of budgeting effectively can often be more difficult than you think!
Coleman & Co can help every business in Lisburn when it comes to budgeting. There are several steps you can make to create an effective budget and our team will always support you.
Understanding Your Cash Flow
Your current cash flow is the biggest sign you have that a budget needs creating. If you have a poor cash flow this could be due to high costs or a poor revenue. Either way, the easy option is to reduce your costs as revenue will not always rise easily.
By having a detailed cash flow report, you can view where your main expenses are coming from and where costs should be reduced. Creating and analysing a cash flow report should always be the first step in creating an accurate budget for your business.
Determine Fixed Costs
A big part of effective budgeting is knowing how much money must go out every month. Whilst some payments may be rewards and one-time costs, a lot of your costs can actually be planned for. By planning for the costs you know are going to happen, you have a good idea of how much revenue should be made and what additional payments could be made.
If you are struggling to work out what payments will be made, you can always look at previous bank statements. Record keeping is essential for every business and this can help you create your budget by seeing what payments have been made in the past.
Locate Least Important Payments
Budgeting may be easy for some businesses to simply lower their costs. However, others may have to completely remove certain payments meaning you no longer get the same perks you have now. Whilst you want to treat staff members and keep the morale within your workplace high, there must be a balance.
By deciding on which payments are least important to your business, you can begin to cut down the bigger costs within your business. Reducing one time payments and payments that have no real benefit to you or staff members will mean you can keep staff happy, whilst still putting a limit on your spend.
Allocate Your Budgets
Whilst start-up businesses may not have to think about this problem as much, bigger businesses should always consider allocating budgets to different departments within the business. This will help you keep a limit on the different sections of your business and stop anyone overspending.
The other benefit of allocation is finding which department can make you the most revenue whilst on a budget. If some sectors can offer high-performance at a lower cost, this is a big bonus. Budget could be increased from this situation, leading to a fair distribution throughout the business.
If you focus all your efforts on short-term goals, it could have a negative effect on your business, leading to less money to spend in the future. By saving now, your long-term goals become much more achievable and attainable, giving you the best opportunity to be successful.
Whilst the majority of small and medium businesses make it past their first year, getting to the five and ten-year marks is what every business should look to achieve. Budgeting now will leave you with more money to spend in the future, contributing to greater growth. If you choose to spend and spend in your earlier years, barriers may arise in the future.
For more information on budgeting and how your business can create an effective budget, call Coleman & Co. We will support all businesses throughout the Lisburn area, ensuring you have the advice to succeed. Call us now on 028 9266 3599 or fill in our contact form to make an enquiry.