Let’s face it, building and growing your small business is both exciting and nerve-racking. On the one hand, nothing compares to seeing something you’ve built on your own succeed. On the other, you always have to be on top of everything, such as your Budget, Cash Flow Plan or Profit Plan. You must also be able to adjust your action plan when things don’t go as you want them to.
This is why planning is crucial, especially for sole traders and small business owners. As you’re wearing many hats, a plan guides and directs you to ensure you’re on track with your business goals.
One thing you have to prepare for is your business budget. A detailed budget plan helps you move your business forward. It could also allow you to consider other growth opportunities.
Your budget helps you track your business’s financial health. It gives you — and future investors— an overview of your business finances. A business budget shows your long-term goals and essential information on the current situation of your finances.
Without one, you run the risk of overspending and not having enough fund for crucial business activities and items.
When you have a budget in place, you’d be able to:
Some entrepreneurs are confused between budgeting and forecasting. While they may seem similar, these two business financial activities have key differences and functions.
Budgeting quantifies your business goals. It shows you in numbers your expected results and the financial position you want to be in. Furthermore, it shows the kind of cash flow you want to have within a specific period.
Forecasting provides an estimate of what you can expect to happen. It gives you a roadmap based on factors like historical data and business performance. Forecasting also lets you know where your business is heading and whether you’re moving in the right direction.
You can think of a budget plan as a tactical tool for managing your business operations. A forecast, on the other hand, is a strategic tool for monitoring business growth.
When it comes to apps and tools for budget planning, you’ll find hundreds of options online. The most important question is “how do you choose budget planning tools and apps for your business?”
First, it’s essential to take stock of the current apps and tools you’re using for bookkeeping and accounting. Then, think about your business’s bookkeeping and accounting processes.
When choosing tools and apps for budget planning, remember that “fancy” doesn’t always mean a tool or app is right for you.
We found that what many small business owners and sole traders need is an easy-to-use tool that doesn’t overwhelm them.
Some bookkeeping and accounting apps we recommend and love using are:
Would you like to use any of these apps in your bookkeeping and accounting process? We can help you integrate them in your business. We can also help you choose the right one that’s perfect for your business needs.
Now that you understand the importance of creating a budget for your business and available tools you could use, you’re ready to start creating your budget.
When creating a budget for your business, you must first decide on the following factors:
Once you got all information mentioned above, you can now decide on a business budget for your chosen timeframe.
Unfortunately, many small business owners find they need help with setting their budget. Are you unsure about how much budget you should allocate for different aspects of your business? Are you confused about how to set a budget based on your current and expected monthly income and expenses? It’s best to consult a bookkeeper or accountant.
Before anything else, make sure your numbers are accurate and up-to-date. If they’re not, you may have problems in the long run when it comes to budget spending.
The best way to track your budget usage is by having a bookkeeping system. This is where your bookkeeping or budget planning apps would come handy.
If you don’t have any tools or apps yet, you could start by creating spreadsheets for the following:
Hay Accounting Group understands how stressful and overwhelming it can be to manage business finances. We were once small business owners ourselves. We have experienced the stress of growing our business and managing our books at the same time.
We can help you build a business you love without being overwhelmed with working out your cash flow and finances. Let us handle those for you through our bespoke bookkeeping and business services.