For businesses, creating a budget is one thing. Sticking to it is another. With many transactions coming in every month, some companies find it difficult to reign in spending. If not careful, expenses can spiral out of control, and budgets can be blown in a matter of days. You don’t have to wait until all that happens. This article will show you six easy tips that will help.
Look to cut costs
The first and most significant step in sticking to the budget is to look for ways to cut costs. Try cutting out on the unnecessary expenses, and see if it helps give you more money towards your savings account or reduces monthly payments of bills.
Among the top things you should look out for is your electronic payments. Why do you have to pay high monthly merchant processing fees while there’s free credit card payment processing? Several merchant service providers process credit card payments for free. With free merchant services, you can save up to 50% on your payment processing fees.
Another way to lower the cost of running your business is to use a virtual office. A virtual office can issue you with an address for your business and a telephone number that will forward to your cell phone or home phone. You can also have a receptionist answer your calls and take messages for you. This service usually starts at around $50 per month, which is much cheaper than renting physical office space.
You could also save money by shopping online. Most online stores offer discounts on items, and some even have sales every day. By taking the time to compare prices on things before making a purchase, you could save yourself quite a considerable sum of money in the long run.
In addition, when shopping online, you can get your items in bulk to save on shipping costs. And, if you join a warehouse club like Sam’s Club or Costco, you can get items at a discount.
Such tactics and many others can save you a considerable sum of money that can be used to stick to your budget.
Set realistic goals
Successful entrepreneurs will often tell you that a business without goals is like a ship without a rudder. The same is true for your personal finance. It will be tough to stick to your budget without setting realistic goals. A good thumb rule is to break down your goal into monthly, weekly, and daily targets.
For example, if you want to save $200 per month, that breaks down into $50 per week or $11.54 per day. It would be ideal if you were specific with the numbers to track your progress easily.
When setting goals, it’s essential to be realistic. If you start with a budget that you can’t maintain, your efforts will fail, and so will the goals themselves.
One of the problems people face when they set unrealistic goals is that even though they might achieve them in the end, their path to get there has been fraught with frustration and guilt. So rather than having one big goal (such as saving $20 000), break down your overarching target into smaller ones ($2000 per month) or milestones ($500 per week). That way, if things don’t go according to plan, some progress was made along the way instead of zero progress followed by an epic fail.
Setting goals is a very personal process, so find what works for you and run with it. Just make sure that your targets are realistic, specific, and attainable.
Create an emergency fund
When the first case of Coronavirus outbreak was reported in China in late 2019, panic spread like a bushfire. With the governments initiating the lockdown of borders worldwide, the disease soon became a pandemic. In the first few months of 2020, casualties rose by thousands, and it seemed as though there was no end to this global crisis in sight.
Businesses started to fold, people lost their jobs, and the stock markets crashed. Amidst all this chaos, one thing was clear – an emergency fund was more important than ever before.
If you don’t have one already, start building an emergency fund today. You set aside this money for unexpected expenses so that you don’t have to dip into your regular budget when something comes up. As an entrepreneur, try to save money that can last you at least six months. This can be a daunting task, but it’s doable if you start small and increase your savings gradually each month.
Any business can achieve this by:
Automating savings – Set up an automatic transfer from your checking account to a savings or money market account so that you don’t even see the surplus
Selling extra items – Hold onto those old laptops and cell phones, as they can earn you some quick cash when times get tough.
Getting part-time work – Any job will do in case of emergencies. If it means putting off that vacation for now, then so be it! You can always go later on.
Remember: Don’t touch this fund unless necessary! Your emergency savings shouldn’t be used for luxury purposes like dining out or shopping sprees (unless nothing else is left). It’s meant strictly for unforeseen circumstances such as medical emergencies or natural disasters.
Track your spending
How can you stick to your budget if you’re not even sure where the money is going? Many businesses fail because they are not tracking their spending. You need to be mindful of where your money is going and how much you’re spending on certain things. Therefore, for every dollar you spend in your operations, be sure to track it and note where you spent that dollar. You don’t have to go the old-school way of writing everything down on a piece of paper. That’s tiring. Today, many apps are available to do the heavy lifting for you.
One fantastic thing about using mobile apps to track your spending is that you can access it anywhere. You can use an app on your phone or even use a desktop app. Besides, the app categorizes your spending for you to see where most of your money is going.
Once you’ve analyzed your spending, it becomes easier to review your budget after some time. If you notice something isn’t going well, you can easily make the necessary adjustments.
Learn to be flexible
Say, for instance, you have got the budget set for the new year and funds released. Come the beginning of the year, your leading supplier bails out, leaving you without the essential stock for your business.
Your first reaction may be to panic as this doesn’t sound good for any business, small or large. There is the worry that comes with having to find a new supplier who you may not know will meet your needs. This may mean a hike in prices, leading to customers bailing out.
However, things can still turn around for the better if you are flexible enough. You must be willing to explore new options and sources of supply that will meet your needs at a lower price or who have what you need in stock. If it means having lesser organic ingredients in producing organic hair products, then so be it because there is no extra option but to stay afloat as the business owner!
This goes without saying that any supplier would want their client’s business just like how they would want their children doing well. This could mean working with them closely on this issue until both parties work together to ensure everyone benefits from the arrangement long-term, including customer satisfaction!
The one thing about business is that it’s dynamic and constantly evolving. You can’t expect to know all about the industry you’re in, which means there will always be new things to learn as well as new sources of supply with suppliers who can help your business grow and evolve.
The best thing is when a supplier helps you discover another source of income or how they could benefit from working together- this may not happen on the first meeting but eventually! This is why they say time investment pays off. One day you’ll find yourself earning more than what you initially expected for minimal effort spent compared to other ways such as using traditional methods like cold calling/emails etc.
This is just one example of how being flexible can help you stick to your budget. Other things that may require last-minute changes include: higher than expected utility bills, staff absences meaning additional overtime payments need to be made, or purchasing a new piece of equipment for your business on short notice.
The more ready you are for these types of eventualities, the less likely it is that they will impact your bottom line adversely.
So remember: be flexible! It could rescue you from some potentially costly mistakes further down the line. It could be the best move you make for your business in the long run.
Spend what you’ve
The business sector is ever-evolving, and technology is constantly changing. This means that you will always come across something that may boost your business. But, it’s important to remember that you don’t have to break the bank to reach this point. You need to be mindful of spending your money and stay within your budget.
One way to stick to your budget is by spending only what you’ve allocated for each category. For instance, if you plan to spend a specific figure on office furniture, you’re not allowed to spend any more than that amount. This may seem like a complex task while starting, but it does get easier over time. Even if the piece of furniture you’re admiring may seem important for your office, if it’s not in your budget, then you need to leave the store.
Remember, as a business person, you must be disciplined when prioritizing your needs. For instance, if you have all the furniture you need for your office but don’t have enough money to pay an employee’s salary, it is more important to find someone who can help with essential tasks rather than buy new furniture.
The appearance of your business is also significant in relation to how customers feel about the company. You may want a specific item because it matches well with the rest of your décor or will make people think they are entering a classy establishment when they walk through the door. But this does not mean that you go overboard and break your budget just because something looks good. If anything else, even if nobody ever sees what exactly goes on behind closed doors (such as storage rooms), remember that everything should be functional as well.
When it comes to spending, another thing to consider is credit cards, as they are the leading cause of unnecessary spending for business owners. The 0% interest rate may entice you for the first few months, but you need to remember that this is only a teaser. Once the promotional period is over, your interest rate will jump significantly, which can cause you to spiral out of control financially. So, if you’re having trouble sticking to your budget, then put your credit cards away and use cash instead. This will help you stay alert of the amount you’re spending, and it’ll be easier to stick to your budget in the long run.
If you must use a credit card, it’s best to go for one with a lower credit limit. This will help you take control, and it’ll be less likely for you to overspend.
Creating a budget for your venture and sticking to it is key to your success. It can be tricky, but it’s not impossible. It doesn’t have to be difficult, either. There are different ways to make it work for you and your company. If you’re looking for ways to stick to your budget, this article shares easy tips to help you out. You don’t have to implement all of them at a go, but start with one or two and see how it goes. Once you get into the habit of sticking to your budget, it’ll be easier for you to keep going.
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