Never underestimate the discipline needed to make a budget work for your business. In the course of a financial year, you may be tempted to spend off-budget but these temptations can be avoided. In this post, you’ll find five top tips to help you stay on top of your budget.
1. Regular bookkeeping meetings
For a start, working closely with your bookkeeper is strongly recommended. They know the books well and may be aware of things that you are not, so make it a point to have regular meetings with them. It’s time, and perhaps money, well-invested to gain an overview of the business’ cashflow.
2. Pragmatism reigns
Be pragmatic in your budget goals. Don’t set yourself up for failure. If a machine needs to be replaced and not continuously repaired to have a longer lifespan, do it. Small businesses tend to fall victim to the “penny wise, pound foolish” syndrome. With budgeting, you’ll learn to allocate funds to what matters most for the business.
3. An agile budget
Uncertainty is the only constant in the world of business. There will always be problems and opportunities. Hence, staying agile is critical to embracing the changes. Your budget should reflect the need for this. A simple way to do this is to set aside funds to address problems or take advantage of opportunities. If neither occurs, its money saved for the future.
4. Accountability
If you’re a solopreneur, involving your bookkeeper in financial decision-making activities, especially for big-ticket expenses, is a good way of maintaining accountability. Of course, the final decision is yours. But having someone you can discuss with is useful. If you have employees, keeping them accountable for their respective functions’ income (if relevant) and expenses is a step towards instituting accountability.
5. Budget reviews
Once you’ve finalised the budget, do not simply store the document away. It should be treated as the ultimate guide to driving the company’s growth for the year. To this end, reviews to check on the company’s progress will be an objective exercise based on the goals set.
Struggling to stay on top of your budget? Connect here to learn how effective bookkeeping helps.