Why Is It Essential to Create a Budget Plan for Your Small Business? - Part 2
In part 1, I presented how to create an effective budget plan for your small business. If you are still not convinced that your company needs one, read part 2 to see the reasons why is it essential.
Making a detailed and realistic budget plan is the most important thing you can do to manage your business, but you may think for a small business budgeting is not so important yet and it is a lot of hassle and headache. However, budgeting provides essential information, it can help you save money instead of overspending, and with this information to create a better maximize your business profit. A well-planned budget will identify your available capital and anticipated income, predict your expenses, and helps you to be prepared for unexpected challenges. Therefore, business owners and CFOs of small businesses also need to consider creating a budget plan with as many details as possible in the most efficient way.
If you are not convinced yet, how it helps your company, here are some reasons to plan your budget:
The budget plan helps to gain control over the company’s money and assure that your business is following the plans and you can easily detect any problems and look out for more opportunities. It allows you to prioritize what do you need to spend on more and where you should save money, and track how your teams and departments performing. You can be prepared for the future more easily and gives you the power to make bigger decisions and implement new changes in your company if needed.
For example, if your sales team performs better then predicted and your defined income will exceed the defined income, you can use these additional earnings to invest more in your sales team with hire a new member to the team or in the product which generated more demand with developing it or produce more if it. Not so positive example, if one of your revenue becomes less than expected in the first month or quarter and it is not in line with your planned budget, you need to rethink your expenses and for the next budget plan, you need to reduce one or more of your costs in order to stay profitable. So you can see that checking on your budget regularly can help you maintain control and make the necessary changes. In order to track your budget and expenses in real-time you can use budget planning and expense tracking software like Haslle, to make it more simple:
A budget plan helps you to manage your spending and track all movements within your company. With this kind of record will show to potential or existing investors that you are aware of your finances and you can develop your business and make it work smoothly. Some investors will not even take your company into consideration without budgeting a business plan and probably they will not be willing to lend you money to grow your business and reach your goals in the future. These goals can be various, like pay some loans or debts, hire new people, subscribe to new tools, rent out a bigger office or simply just maximize the profit, but without tracking your movements you might not be able to convince companies or individuals to invest in your business.
It can be that your business is very new and you are currently in the startup phase, then your only possibility to make market research so you can present numbers and report predicting your revenues and expenses which help that investors will take your company more seriously into consideration and with the investments you can enjoy experiencing your financial goal come true.
Save money and stop overspending
Small businesses and startups that do not budget and plan in advance their finances tend to spend more or pay for services that are not essential and save less money than the companies which are aware and control their finances regularly. This is because if you assign your money to different teams or departments in advance and set up a budget for example with a smart company card, then they will not be able to spend more than you defined based on your calculations which could lead to decrease your profit and limits your spending for the next quarter. If it happens from time to time or every month then you need to assign more and more of your income for covering the overspending and not on your business development. In order to save money for your company, you can even designate part of your budget to be wired automatically into a savings account which provides you safety for the unexpected future emergencies. You can easily transfer this money with your budgeting app or software. If you are interested in one or would like to issue a pre-loaded or virtual card for budgeting, then click below:
Be relaxed and flexible
When you are planning your budget, you need to decide how to share money between the teams but also between different categories. You should be strict with the savings and the essential spendings but you can be flexible with the amount set to other costs. Like this, you can adjust your plan to cover emergency costs or unexpected expenses. Furthermore, you should not forget about the happiness and well-being of your employees. If you assign money to team activities, business travels, lunches, training, and health care, then your employees will feel honored, and with that be more productive and they will more likely stay for long years and provide a good quality job for your business. Budgeting is not about cut off all not essential expenses, it is about giving you the opportunity to spend your money smarter and helps you to avoid financially risky situations. And if they can do it with an expense tracking app and to make expense report procedure hassle-free, then they can concentrate on their more important tasks during working hours.
Budgeting can be simple
You can simplify all the processes by using expense management or budget planning programs that go beyond excel spreadsheets. Companies like Haslle, offer an effortless and easy solution for budgeting and set up categories for your teams and departments and issue smart company cards that can be virtual or pre-loaded in order to set up a budget even more hassle-free as you do not need any special qualification to use the tool. Having Haslle as a spending management software also provides you with the opportunity to perform all these processes, on-the-go on your smartphone, so you can track your expenses any time and be financially aware. Furthermore, in case your business relies on seasonal sales revenue, Haslle can help to set up budgets for different time periods. So, for example, if you generate most of your business revenue during summer or the holidays, our finance management software will allow you to plan according to that.
If it sounds interesting for you, do not hesitate and check out how it works by clicking below: