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Setting and sticking to a budget is one of the hardest things on the planet, and it’s especially hard for a business. After all, you need things! You need employees, new office chairs, a new computer and some new software that will increase workflow! How are you supposed to stick to a budget?
The truth is, however, that it’s absolutely necessary to stick to a budget if you want to see your business succeed, and while a budget might feel restricting, it gives you the permission to spend where you need to and say no where you don’t. Try it out – if you don’t like it after six months, you can always go back to not having one. Here are some considerations you need to make while you’re developing a budget.
Checking Your Budget Monthly
Spending requirements change from time to time, and making sure you’re on track every month is important. Maybe you hired someone new or let someone go; these need to be updated in your budget when the new month comes around. Take a look at your sales forecast, your expenses, your income. Where they what you expected? Did you fall short in income, or did you go over in expenses? Will that happen again? It’s important to account for the “I didn’t know that was going to happen” kind of events, too, so don’t forget to put something aside every month when you update your budget.
Changing Your Budget Monthly
After your review, what did you find out? While some months may be pretty static, others will surprise you, especially at first. How much did you spend on lunch for the office last month? How much did you spend on IT experts? What did you spend on other consultants, or driving to meet with clients? Obviously if you went way over budget in some of these areas, you’ll need to pull from other parts of your budget to cover the overages – and sometimes this comes right out of your pocket. Sometimes this will encourage you to be more careful next time, or maybe to stay on top of those receivables a little bit better.
To Stay On Board, Incentivize Your Budget Performance
If you’re really struggling with keeping up on your budget, there is absolutely no shame in attaching incentives to a good budgeting month. Maybe at the beginning of the year when you do a yearly budget, you can tie some parameters to profit or ROI in marketing. If you meet and exceed those goals, maybe you can budget everyone in your office a little bonus, too.
Overall, budgeting is very important for individuals and for companies, and it’s especially important to keep small, growing businesses on track financially for success in the future.