Budgeting is an important part of business planning. In simple words, it is a “program” to ensure you do not spend more than you're planning. It’s important to manage your finances to run your business efficiently. When done properly, budgeting helps managers perform their management tasks more efficiently and simultaneously serves as a controlling and planning system. It won’t be wrong to say that it is a proactive approach to managing your finances and meeting profit goals to ensure financial success.
“When you create a basic budget and stick to it, it will suddenly seem like you have more money.” Dave Ramsey
1. “We're on the verge of a financial collapse unless we balance the budget, and that means some really, really tough decisions.” Gary Johnson
2. “A budget is telling your money where to go instead of wondering where it went.” Dave Ramsey
3. “A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” Robert Fulghum
4. “The budget evolved from a management tool to an obstacle to management.” Charles Edwards
5. “A budget isn’t about restricting what you can spend. It gives you permission to spend without guilt or regret.” Dave Ramsey
6. “When you’re working with a smaller budget, I suppose one of the things that has to be in your mind when you’re writing is that you have to keep the characters down to the minimum.” Atom Egoyan
7. “Working without a budget may be fine and dandy, but it’s a bit like going for a drive without a destination in mind. You won’t know where you’ll end up until you get there. ..A budget is your sat nav to wealth, abundance and fun!” Kristina Plimer
8. “Manage your spending by creating and sticking to budget.” Alexa Von Tobel
9. “Never spend your money before you have it.” Thomas Jefferson
10. “It isn't what you earn but how spend it that fixes your class.” Sinclair Lewis
Managing cash flow is the most challenging of all tasks for a business. Budgeting is one of the most effective ways to managing your finances, avoiding costly surprises, and successfully meeting profit goals. Here are a few budgeting tips for businesses to meet profit targets.
1. Make long- and short-term projections: Setting clear financial expectations on a monthly and yearly basis will ensure that you never go beyond your established limits. With a clear picture of your finances at hand, you will always know how much and when to cut back on your expenses, especially when you’re not too happy with the numbers. For small businesses, short-term monthly budgets are essential to guide you what is required to build your organization in the longer run.
2. Define the risks: You cannot ignore the impact of risks to your business when planning for your financial future. It is important to consider both short- and long-term risks that may have a financial impact on your business. Define and understand the threats to productivity, so you can create an emergency plan and plan for financial future.
3. Overestimate expenses: You cannot always go right with your budget planning. Some projects are bound to exceed your budgetary expectations. More so, every project has that “one-time cost” you had never anticipated. It is crucial that you budget slightly above the anticipated line-item costs. This will prevent you from surprises later and ensure that you aren’t caught unawares when it does happen.
4. Plan for big purchases: An expected breakdown of machinery can prove to be a big financial drain on your business. Prior planning for large purchases will ensure that you lay down your budget accordingly and do not have to suffer from financial burden when you actually need to make large investments in business.
5. Set realistic cash flow and profit projections: Your business revolves around your cash flow projections. Keep a close eye on your cash flow targets and be realistic with this number to prevent unpleasant surprises. Remember, the prime reason for failure of most businesses with great profits is a lack of cash. You don’t want to overestimate your cash flow and end up with a mess. Make sure you set realistic expectations and are always within the projected range as far as cash flow is concerned.
6. Identify essential, non-essential expenses: differentiate between your essential and non-essential expenses. What are the expenses that must be heeded to in order to operate your business? Compare these to commodity expenses that don't really risk your business. When you have a tight budget, you may want to avoid splurging on commodities that aren’t too essential for your business.
7. Revisit your budget constantly: Setting your budget and forgetting all about it isn’t the best strategy to run your business finances successfully. You will need to revisit your budget at regular intervals and make changes based on growth patterns. Revising your monthly and annual budget regularly will give you a clear picture of your finances, so you can better control financial decisions.
8. Pay attention to sales cycle: When budgeting, one of the most crucial aspects to focus on is your sales cycle. What are the periods when you have a lull in your sales? Use your slow periods to reinforce your marketing efforts, create new ways to attract leads, and plan ahead for the next bloom.
9. Don’t expect complete accuracy: Of course, you should religiously follow your budget, but that does not mean you will always get accurate results and never go beyond the targeted expense range. There are bound to be failures, so do not be discouraged; rather, take them as stepping stones for success.
10. Reserve some profits: There is no fun in spending all of your profits unnecessarily. Remember, you have to be prepared for unplanned emergencies and contingences. Spending all of your profits could make things difficult for you when it comes to growing your business in the future. Reserving some of your profits handy in your savings account can help you with expansion and save you from financial blues when you need funds the most.
1. Mint: Effortlessly create budgets with this all-in-one application that gives you a clear picture of your financial life and sets you up for success. Additionally, the tool is designed to give customized tips to clients to reduce expenses and maximize money.
2. GnuCash: The free budgeting application is compatible with Windows, Linux OS, and OSX and suitable for home and small business. The tool can be used to track income and expenditure and bank accounts.
3. Personal Capital: This application is available with free financial tools, including calculators, which can be used to manage your financial life. The easy-to-use dashboard works with all of your financial accounts and gives you a clear picture of your net worth.
4. Budget Tracker: It’s easier to manage money online and budget your finances with Budget Tracker. The powerful tool helps you keep track of your bank accounts and financial transactions, so you know where your money is going. The application also sends payment reminders when your bills are due. You can receive the notifications on your phone or email.
5. BudgetPulse: The finance management software with standard budgeting and finance tracking features. The tool makes it easier to organize cash flow, bank accounts, and expenses and discover where savings can be made, and accomplish larger financial goals.
6. HomeBank: Keep track of your expenses, assets, income and generate real-time reports of your financial assets with HomeBank. Its user-friendly interface makes tracking archives, accounts, budgets, credit card transactions a seamless process.
7. Money Manager Ex: The open-source, cross-platform personal finance software is designed to help users organize finances and keep track of their money. Get detailed view of your finances using the user-friendly platform that comes complete with all the basic features of a personal finance solution.
8. Money Strands: One of the top financial managers, Money Strands is designed to automatically classify all of your financial data into meaningful categories. The application supports CSV/QFX/OFX formats. Get unified, real-time view of your finances and track your spending anywhere anytime.
9. Personal Capital: The intuitive interface allows you to track your financial life as you work toward your goals. Manage your finances and investments with this user-friendly budgeting tool and keep a close eye on your accounts.
10. Budget5000: Plan your budget online with this easy-to-use financial manager. Budget on Web is simple to navigate and accessible online anywhere any time.