For some people project management comes quite easily, for others it is the part of running a small business that they most dread. But budget planning is precisely that. It is about more than simply bringing in funds with which to launch your new start-up.
It is about the whole process of pricing up jobs, sending out invoices, credit control and bill payment – which of course includes the whole question of taxation. In short, it is about balancing income with expenditure in such a way as to ensure that there is a profit made at the end of it.
Identifying Future Outlay and Covering Costs
One important part of business budget planning is knowing what monies are going to need to be spent over the coming days, weeks and months and ensuring there is going to be enough in the account to cover it. This includes materials, tools, salaries, bills and all other planned outgoings. This should all be set out on a worksheet which can easily be consulted as required.
Keeping Cash Flow Steady
This means ensuring that there is always a healthy balance rather than allowing costs to suddenly swamp you. There should be a steady flow rather than perpetually having to chase clients to ensure that there is enough money left in the bank to pay next week’s wages.
Recording Allowable Expenses
One of the big breaks that small businesses enjoy is being able to offset allowable outgoings against tax. It is essential that checkable records are kept of all such expenses so that they can be presented to the Internal Revenue in the event of challenge.
In business trusted customers expect to receive services today for which they will pay later. But late or unpaid bills can be a huge problem to small businesses operating close to the margins. Always maintain an efficient credit control regime in which late payers are chased and bad payers excluded. Only give as much credit as you can comfortably allow and don’t permit individual debts to become too large as to be unmanageable.
Maintaining a Contingency Budget
As the old adage has it, always expect the unexpected. Sudden and unplanned-for expenditure is part of the deal when you run an enterprise, and you should never put yourself or your company in a position where it is going to go under because the roof is leaking or the company vehicle needs a new exhaust. A contingency fund is essential for dealing with life’s unpleasant little surprises.
Developing a Forward Plan
Business is not a place where everything can be taken as it comes. The small entrepreneur should always have in mind the next phase of growth, and ought actively to be planning for it. It is worth having realistic projections for future growth which can be constantly revised upwards in response to previous targets having been reached. Think ahead, plan ahead and be prepared are the three essential prerequisites for ensuring business growth.