Small businesses owners face a number of obstacles standing in their way of success. From cutting through the bureaucratic red tape and acquiring the necessary licenses for operation, to hiring the right employees who can help you attain the next level of success, the list of challenges goes on and on.
But one of the most important difficulties you’ll encounter is maintaining a business budget that keeps profit margins strong and prevents you from dipping into the red. The last thing you want is to receive angry phone calls from past-due lenders demanding late payments on your small business loan.
Balancing the books, forecasting the sales pipeline, and fortifying your financial strength is never easy—especially for entrepreneurs who are just getting their start. Use these tips to stay on the right track and stick to a budget so that you minimize the risk of falling under and becoming another failed startup statistic.
1. Set up your accounting system ASAP
Budgeting basics 101 will tell you that accounting is the language of business. No matter what industry you operate in, you need an accounting system in place to record every transaction and invoice statement. You’ll use the numbers to guide every evaluation and estimation, and in order to get a clear picture you can rely on, each line item must be precisely accurate.
Otherwise, an error here or an omission there can cause your financial analysis to go askew and might lead you to go over budget using funds that don’t exist.
2. Invest in online tools for automated assistance
If you’re feeling the pressure to upkeep accurate accounting and bookkeeping, then it might be smart to enlist some professional assistance. Paying a little more now upfront can save you from a potential mess down the line that’s much more expensive.
The good news is that you don’t have to place someone permanently on your payroll as an accountant. You can combine online accounting tools with financial planning software that automatically plugs the numbers in for you, so you can easily keep track of the money coming in and going out with a projection of what’s to come in the future.
It’s the easiest way to monitor your budget and stay within its lines, freeing your attention to focus on more important business matters.
3. Research every asset with extreme scrutiny
Another key strategy for cutting back on business expenses is taking the time to carefully research every asset you acquire with extreme scrutiny. There’s no item too small; whether you’re purchasing equipment and need to find the best deal on an ice machine or you’re searching for commercial real estate in a high-trafficked area, the more comps you have, the better.
Compare every asset with a couple close equivalents to get a better understanding of the market and what you can find for a given price. Then, when you see a bargain below market value, snag it to save money within your budget.
Note: Be cautious, though, because when a deal seems too good to be true, it usually is. For example, you don’t want to score an ice machine for cents on the dollar then pour a bunch of money into repairs if it regularly goes out of service. Or, you make think you found a great price on a lease only to realize the location is on the wrong side of town and you can’t drive customers to your storefront, leading you to fall behind on revenue equal to what you would have been paying in higher rent.
4. Explore low-cost marketing to save on expensive advertisements
Advertising is one of the quickest ways to eat up your budget, so before blasting your business across bus stop benches and billboards, look into low-cost marketing alternatives. Digital marketing offers an affordable way to promote your company at a fraction of the price with effective, data-driven results.
You can research the best SEO strategies and tweak your website to boost your organic search presence, or you can hire an independent contractor to do the work for you. Also, content marketing on your blog costs nothing at all, unless you prefer to hire a freelancer at an affordable rate.
Always err on the side of saving, not spending, and your budget will have plenty of room to cover the common obstacles that arise within a small business organization.