At the heart of every successful business is a holistic budget. Understanding budgeting basics including annual revenue and expenditure projection is absolutely essential for planning and managing growth for your business. Creating a budgeting process is the most effective way to keep a business and its finances on track. Without a budget or a plan, your business is opened to the risk of spending more money than it is bringing in.
A budget is a financial plan for the future concerning the revenues and costs of a business. Below are some tips to help in budgeting.
FORECAST AHEAD: Make a preview of your entire business calendar for the year, account for those expenses that your business is likely to have. While doing this do not focus on larger expenses and side line minor expenses. Many business owners keep a close eye on their large expenditure but they don’t pay much attention to smaller ones. This could be a costly mistake, since those small expenses quickly add up and accumulate to more than what you can expect.
REVENUE PROJECTION: It is important to make a projection of your revenue and compare to your expected budget expenses. Budgeted expenses should never exceed your budgeted revenue as this would mean you have planned to make a loss for the year or you are willing to finance your expenses from other sources.
DON’T UNDERESTIMATE YOUR BUDGET COST: Rounding down your budget cost may cut you short or make you run out of money. It is much easier to account for under spending than overspending. It reduces the hit on your revenue when you underspend.
RANK IN ORDER OF PRIORITY: Always identify essential and less essential expenses. Ask yourself if that expenditure will help the business to be more efficient in making profit, if not lower your priority. For example expenses like wages, rent are more essential to your business than non-essential expenses such as office renovation. Set your priorities right.
REVIEW YOUR BUDGET REGULARLY: A budget should be an ongoing, changing, working document that changes as your finances changes. Periodically reassess your budget so as to cut down on wasteful expenses in order to maximize your business profit.
Creating a budget for your business doesn’t have to be an overwhelming process. By following the tips and advice above, you can ensure that your business runs smoothly while feeling prepared for the entire financial year.
At INCE Consulting Limited, it is our responsibility to be of immediate assistance to all Organization and to advise companies on how accounting and tax issues could be resolved without disruption to their business.
We are the best business support service partner you can get.
Contact us at info@inceconsulting.com or +234 (0) 803 876 7883 to get expert help.
