Every year, or quarter, many small businesses spend time and effort creating a budget.
But creating a budget for your small business is the easy part.
The difficult task here is sticking to that budget.
This is a particularly difficult task because of the hard work it takes to do.
And, well, many business owners don’t have that time.
A good majority of them just hope that by creating a budget, their employees would automatically stick to it.
This article contains practical tips that would help your business stay true to its budget and enjoy the benefits of having a budget brings.
Want to learn how? Keep reading!
Three (3) Practical Tips To Help Your Business Stick To Your Budget
1. Start By Creating A Budget You Can Stick To
The best way to stick to a budget is to create a budget that is realistic and involves every relevant stakeholder.
The way a budget is drafted would determine to a large extent if your small business can stick to it.
– Start by Involving Everyone: You cannot expect a budget that was created solely by your accountant to be successfully implemented by the rest of your team.
They would no doubt see it as an imposition, a burden, and at best only a few of them would stick to it.
But when you create a budget where the input of everyone that would be affected by the budget is considered, they’re less likely to be unhappy with its terms since they participated in its creation.
In essence, your employees are more likely to stick to a budget that they were involved in creating.
– Set Realistic Numbers: When the numbers you set in your budget are unrealistic, your budget would be extremely difficult to stick to.
No matter how hard your employees try, that is why you must ensure that your small business budget is based on realistic figures.
To help you base your budget on current reality, you have to work with your accounting and purchasing team to evaluate your finances.
Evaluate your books, the pricing for goods and services from suppliers, and make informed projections that would guide your budget.
2. Make Your Budget Flexible
Different factors constantly affect the numbers in your budget. Factors like rising prices, emergencies, and opportunities.
In such a constantly changing business atmosphere, it is difficult to set a rigid budget and expect your business to stick to it.
This is why setting a flexible budget is your best bet to make it easy to stick to.
To make your budget flexible, you have to create room in it to adapt to change.
You do this by allowing a percentage of your budget to remain unallocated.
For instance, allocating a portion of your budget as Miscellaneous can help you take advantage of opportunities that you didn’t plan for but are in line with your business goals, handle emergencies or unforeseen rise in prices etc.
3. Go Big On Accountability
Create a structure that allows everyone in your business to be held accountable for their expenses.
Yes, that includes you the business owner too.
You should be able to hold your purchasing team or marketers accountable for their numbers, as they should you.
To do this successfully, make sure everyone is clear on the terms of the budget and how it affects them.
A regular review of your budget is critical to ensure that everyone is sticking to their budget.
Implementing a budget that is true to its terms requires continuous effort.
And business owners must be ready to put in the work to ensure that their businesses stick to it.
Need help scaling your business? Contact The SME Coach today!!!