Nowadays, when you can have both clients and suppliers online and even offer your service to clients from different parts of the world, starting a new business seems to be very easy.
But one thing will never change. You are not able to grow your business or make it proficient without having budgeting skills.
That’s why the essential budgeting tips covered in this article will be very useful if you have or just going to start a new business. Keep them in mind to attain success.
1. Set Up a Budget Plan
Probably you will never be able to stay on top of your finances without setting a budget. Actually setting up a financial plan is not as hard as it seems to be. The key is determining the money you actually have, earnings you will probably have and expenses you have to do. Try to have in your plan the whole financial-related information, because even very small expenses can cost very much for your business in the future.
There are a lot of applications and tools that can help you. You can even create a spreadsheet. Simply choose the most comfortable system for you.
2. Separate accounts for you and for business
Is it a bad idea to use your personal savings for your business? Yes, actually. Spending money that can work for you in the future is also not a good idea at all. Let us explain:
Do you want to know how proficient is your work and how your money works? Yes, and it is important. For sure the more you invest the more you gain. But it’s a smart idea to have separate accounts for you and strictly for your business.
Even more important not to use money put at work for your needs. Let them work! Even if your shop or office brings you millions of dollars you should satisfy your needs with salary. You have done a really good job this month? Award yourself with a bonus.
3. Emergency fund is a must
Unfortunately, an emergency can always appear. And maybe you will need to tap into your business budget. That is why having an emergency fund seems to be a smart idea. If someone in the family got sick or your car broke down you have funds that can help you. We hope it never happens, but it’s better to be prepared. If your emergency fund is simply not enough, then we suggest applying for personal loans or small business loans at OpenLoans.
Aside from that, you can also use your emergency fund for sudden business opportunities that you have not prepared for. Believe, you will be sorry for a really good opportunity you’ve missed. So keep aside some money for good days too.
4. Don’t put all your eggs in one basket.
Leading a business requires much time and effort. And it is a good idea to give all your entrepreneurs power for the job of your life. But what if something goes wrong?
If you have other options as well and other investments you can gain from one when you lose from another. Pay attention to passive income opportunities so you can still easily manage them even with your hectic schedule as a solopreneur.
Passive income also is a good opportunity to finance your business if it’s not proficient for a period of time. Having other income and putting money away from it for an emergency or perfect opportunity seems to be a good idea.
5. Don’t overestimate your projected income.
Look for example most successful young entrepreneurs in Silicon Valley don’t have expensive cars or personal jets. They know that word changes very fast (actually they change it), so IT millionaires keep aside some budget for better chances or worse times.
Put money towards your emergency fund, debt payment, or other investment opportunities instead.
6. Professional help.
You don’t need to bear all that burden yourself. You can always seek the help of a bookkeeper to help you with your taxes. Getting a financial mentor or adviser is already a good idea to help you manage your finances better and meet your financial goals faster. Also, you can get an outsource marketing company to lead your marketing campaigns or run google ads for e-commerce.
Another reason to go for help is to save time to make money. Not having a bookkeeper can probably save you money only if you are a good one bookkeeper too. But you will lose a lot of time and everybody knows – the time is money.
7. Financial goals.
Can you imagine Sysiphus a businessman? Probably no! When he is on top of the mountain he goes back again. And there are lots of Sisyphus-entrepreneurs who are just rolling a piece of rock. It’s important to know where is your permanent top and where is another.
Speaking of goals, what are your goals? Start with your long-term goals. How do you see yourself and your business five years from now? How about ten years? List down realistic milestones based on your long-term goals. These will be your short-term goals. Then, you can further break these milestones down into actionable items that you can start working on immediately. In this way, you will have a destination that you’re pushing towards instead of just wandering aimlessly each day.
8. Retirement plan.
One of the downsides of running your own business is that you don’t have an employer-sponsored plan, after all. That is why you need a retirement plan. The day when you will want to rest and pass it on to descendants will come. And probably you will want to have your income source. In the end thinking about the future is a good habit for an entrepreneur.
9. Shop Smart.
Don’t lose your chance to shop smart. No matter what you need office furniture or some really necessary electronics. Renting or buying used furniture and other stuff will help you to save a lot of money. On the other hand, you should never buy really old and low-quality stuff. It can’t serve you or your business for a long time and soon you’ll be in a need to buy a new one. Don’t skimp on quality so as not to pay twice.
Also very important not to skimp on the stuff you need and don’t use third party services such as printing, keep it inhouse. Overpaying for too expensive software is not a good idea: pay for software you and your staff really need and use a more budget version. This doesn’t mean you should save on everything. We just advise you to cut your expenses if there is a good possibility.
10. You should have a salary.
You have started a new business and want to invest more to grow? It’s very healthy and smart. But sometimes it feels that your personal income doesn’t grow and there is no earnings for you at all. Thus you can get burnt out after the first few months of starting a new business. Set up a salary for you and even bonuses as we have already advised before.
Good luck with your business ventures!