Having cash flow problems? Not knowing your numbers? Not knowing your profit and loss? There is one solution that can help you gain better control – Budget!
Okay, so you have just purchased your business or have a small business and you know your sales income but when it comes to bookkeeping or (more importantly) budgeting you skills are lacking? Well I’ve got good news for you, it isn’t really that hard!
Budgeting is all about estimating and matching expenses to revenue. If you don’t have this, then how are you supposed to know if your business adventures are paying off for you? The revenue you create pays the expenses that you need for your business to run.
To put it simply:
High Expenses + Low Revenue = Losses – No Profit
Matched Expenses + Matched Revenue = Break Even
Low Expenses + High Revenue = High Profit
Not Knowing your numbers = Not knowing your business
Now, I am not saying don’t have expenses – every business has them but if you don’t know or understand your expenses and revenue there is a serious problem! All that hard work and effort that you have been putting into your business could all be for nothing.
I am not here to tell you exactly how your budget should be set out because everyone has a different situation. But, there are some things that are common throughout all business owners. Things such as; rent or mortgage, utility bills, payroll expenses, interest and tax payments and the list goes on. The point is that every business (no matter what stage they are at) should know what there expenses are. Without knowing your bound to find the going tuff!
Tips:
- Check Industry Standard
- Make a Spreadsheet
- Factor in Slack – Times and a Contingency Plan
- Look To Cut Costs
- Review The Business Periodically – Weekly or Monthly
- Shop Around For Services + Suppliers
If you identified that you have more money going out of your business than coming in, you are likely to run out of cash. You could consider restructuring the timing of payments and receipts in your cash budget to stop this anticipated shortfall occurring.
If you cannot do this, you may need to consider cutting costs, improving purchasing power, improved marketing or improving pricing.
Click here for a BUDGET TEMPLATE that will help you to set up your Budget – for your Cash Flow and Finances. If you would like us to email the template in an Excel workable sheet you can email us here
