A financial plan is an intrinsic part of every solid business plan. It’s crucial to design it whether you’re planning to attract investors to your business or not. One of the best way to manage your expenses and avoid any issue with the IRS is to create a realistic budget. Many entrepreneurs have entrusted their book keeping needs into the hands of expert CPA in Sun City AZ. It goes without saying that you still need to know some important things about handling small business finances before taking this step. The following suggestions must be duly considered as you design and stick to your budget.
1. Pay important bills every month
Certain bills like rent, employees’ salaries and utility bills must be paid at the end of each month. Failing to take this step may have a negative impact on your cash flow. Ensure that you pay these expenses on time, including business loans. Some companies even pay up to six months or more in advance.
2. Identify your risks
Risks and opportunities are inevitable in business. Take note of these factors as you design your budget. Conducting a SWOT (strengths, weaknesses, opportunities and threats) analysis can help you to recognize your business risks better. In addition, it will be easier to design a viable budget and have enough resources to grow your business.
3. Set aside an emergency fund
Equipment can break down at any time without prior warning. Having an emergency fund along with your insurance plan will help your business to scale through difficult times and get back on its feet. Another thing is that you won’t resort to using cash that is budgeted for other important projects. Entrepreneurs are often advised to have at least six month overhead in place to ensure the smooth running of their businesses. In case you have excess funds, consider putting it in your emergency fund if it’s relatively low.
4. Make plans for unexpected costs
All businesses will encounter hidden costs at one time or the other. For instance, the price of materials that are needed for the production process may suddenly increase. It’s advisable to budget slightly more than the normal price. The money will still be invested into your business if there are no changes in the price. Set aside time to research about regulatory, insurance and legal costs in your locality. More so, be genuinely interested in your competitors and learn more about them.
5. Evaluate your budget regularly
Reviewing your budget every 2-3 months should be top priority. The insights gleaned from it will be useful for improving your overall marketing efforts and adjust the plan accordingly. Time is another important factor that must be properly managed in order to build trust with your customers and become a force to be reckoned with. Take note of the period that your business is usually slow and secure sufficient cash to help you survive and thrive. Asking for professional advice can also help your business to go a long way.